Am I mad not wanting to get a mortgage?

awec

In practical terms how does a right of residence work? Who pays for the maintenance and upkeep of the place?

OP: what age are you relative to your sister? It would be odd for your sister to accept a right of residence for your life if you are of a similar age, as in this instance inheriting the property is of no real benefit to her. Unless she is going to rent out rooms in it or something, or live in it also?

fairyribbon

History Queen wrote: »

But are you sure it will be rent free? I'm just wondering as I've never come across this before but the rights of residence don't stop your sister charging you rent do they? Just putting myself in her shoes, if I owned a house and had the expense of maintenance I don't think I'd be happy for my sibling to live in it rent free. I wouldn't charge market rate rent but I would expect some sort of contribution towards costs.

Yes rent free

JoChervil

OP you sound like a free spirit for whom mortgage would be an obligation, not a stability.

But it all depends on your circumstances. For example, if you are single and if you can afford renting now and buy a house later for a cash. And the place where you work and live.

I wouldn't buy a house at the moment for many reasons as well. Situation is uncertain and in such times people prefer not to keep cash, so they put it into properties. So in my opinion houses are now slightly overpriced. Also more people will be working from home, so buying now in Dublin for example, when you could buy twice cheaper elsewhere, even in a cheaper another country may be an option in the future.

And if you are single, you can meet a woman, who has a house and already pays mortgage. So selling a house would be an unnecessary hassle. And renting it out for some people might be a nightmare, if it is not yours cup of tea.

But what, if your parents know you the best, so prefer not to leave you money, only place to live. It looks like they worry you will end up homeless, so probably stability earned by you doesn't look like a valid option.

PokeHerKing

fairyribbon wrote: »

I’m at that age when all my peers are saving and getting mortgages. Am I mad for not wanting to jump on board? I’m worried that I’m missing out on the chance of gaining a profit in years to come. Part of me wants to just continue to rent and I keep hearing “ it’s dead money” “you won’t own the place” “your paying another person’s mortgages” which are all valid statements but the thoughts of getting into this 25-30 year loan and paying interest and everything else that comes with it seems mad to me especially as the property here seems very overpriced.
I’m also curious- when people do pay off their mortgages do they tend to move and sell at 50-60 years old like they say? I would imagine you would be less likely to move at that age.

Only thing I would say is dont assume you've loads of time. Life moves fast and as the years go by certain things, home ownership being one, become much harder. Nobody knows what way prices will go either and I mean nobody.

fairyribbon

awec wrote: »

In practical terms how does a right of residence work? Who pays for the maintenance and upkeep of the place?

OP: what age are you relative to your sister? It would be odd for your sister to accept a right of residence for your life if you are of a similar age, as in this instance inheriting the property is of absolutely no benefit to her.

Not sure the practical terms. My parents will
Leave money, me and my sister will all have money to contribute to the house. My sister is from me with a right of residence as she owns a house already

fairyribbon

PokeHerKing wrote: »

Only thing I would say is dont assume you've loads of time. Life moves fast and as the years go by certain things, home ownership being one, become much harder. Nobody knows what way prices will go either and I mean nobody.

Yeah my fear is housing prices will continue to soar

Housing isn't like a car where you can choose to pick something up for 2k that'll last a few years or pay €600 a month for a new yoke and everything in between.

HAP has put a high floor on rents. Where I am the cheapest just-above ****hole to rent is €1200 a month. That's more than the payments on a €300k house. Which are a lot, lot, lot nicer than the places that rent for the €1200.
Even if you're buying near the peak it might mean a "rough" year or 2 on paper but taking the example of someone who bought in 2007 (not that many people as it happens) they're halfway through a mortgage, likely have over €100k in equity built up and are still paying less than the "alternative" of renting.

awec

fairyribbon wrote: »

Not sure the practical terms. My parents will
Leave money, me and my sister will all have money to contribute to the house. My sister is from me with a right of residence as she owns a house already

So your sister is inheriting a house that she is granting you right of residence on?

Which means she cannot sell it. And she's not going to live there. This is a very odd setup.

Usually right of residence is to leave a property to someone that may have an elderly relative still living there, so that the house can't be sold until that elderly relative dies.

fairyribbon

History Queen wrote: »

But are you sure it will be rent free? I'm just wondering as I've never come across this before but the rights of residence don't stop your sister charging you rent do they? Just putting myself in her shoes, if I owned a house and had the expense of maintenance I don't think I'd be happy for my sibling to live in it rent free. I wouldn't charge market rate rent but I would expect some sort of contribution towards costs.

100% rent free. She could charge if she wanted but she does not. If she decides to in the future- I have money to pay her if needed

tom1ie

fairyribbon wrote: »

I am aware of tax implications. A will has been made, we have a accountant and tax advisor.I have a right of residence for my life. I can live in the house for as long as needed- all my life if I want.

So your sister will inherit a house that she can’t sell?

fairyribbon

awec wrote: »

So your sister is inheriting a house that she is granting you right of residence on?

Which means she cannot sell it. And she's not going to live there. This is a very odd setup.

Usually right of residence is to leave a property to someone that may have an elderly relative still living there, so that the house can't be sold until that elderly relative dies.

Well this is what my family decided on. First born got the house but she already owns a house she is happy in so in order for the house to not be left idle, I can live in it

fairyribbon

tom1ie wrote: »

So your sister will inherit a house that she can’t sell?

Pretty much. I don’t think she is interested in selling as she has her own house

awec

fairyribbon wrote: »

Well this is what my family decided on. First born got the house but she already owns a house she is happen in so in order for the house to not be left idle, I can live in it

I am going to be honest and say I don't think your sister understands what she is doing.

tom1ie

fairyribbon wrote: »

Yeah my fear is housing prices will continue to soar

If interest rates increase, mortgage repayments will increase.
Interest rate are at an all time low.
If interest rates increase more people won’t qualify for mortgages as they won’t be able to afford the repayments, hence you would imagine house prices should drop, coupled with more supply coming on stream.
However government policy will probably try and stop this somehow.

beveragelady

Why would your sister willingly inherit responsibility and expense of a house she's not going to get any benefit from? She'll be responsible for all the hassle of being a landlord except her tenant expects to live rent-free. She'll be paying LPT, insurance and all the other little expenses on this house and the one she lives in.
Unless her plan is to charge you a nominal rent, well below market value. If she does that she'll start resenting it sooner or later. Nobody would blame her for raising the rent, particularly if, as you said, you have money. Then you'll be paying market rent at a time in your life when you could have a nice manageable mortgage.
By occupying the house without paying rent you're not just getting a great deal for yourself, you're depriving your sister of the opportunity to have an income from the house.

tom1ie

fairyribbon wrote: »

Pretty much. I don’t think she is interested in selling as she has her own house

How is she going to pay the inheritance tax?

el Fenomeno

fairyribbon wrote: »

Pretty much. I don’t think she is interested in selling as she has her own house

- What if they find themselves in financial trouble?
- What if the marriage breaks down and she needs to move?
- What about when her kids grow up and the ramifications of the current crisis means they can't find a house, and she just happens to have a second house in her name?
- What if her current house is damaged beyond repair by fire or otherwise?

Keep on mind, her partner may be not as fond of you as she is, and will be in her ear for years about this asset they have worth hundreds of thousands that she's letting her sibling live in for free.

However unlikely you might think these situations are, they could happen.

HamSarris

The main problems with I have with mortgages:

Interest payments are dead money. Outside of Dublin, it’s easy to rent a room and sometimes even a full apartment for less than the interest payments of a mortgage.

You may build up equity in a property but unless you intend on sizing down one day, it’s only paper equity than you can’t use to purchase anything else. Your children may enjoy it one day but not you.

You could be stuck with an illiquid asset due to negative equity or your location. Career opportunities may emerge but you have to turn them down because you’re married to your house.


And the worst part of a mortgage – you’ve just paid it off and you’re partner decides thay want a divorce and you have to move out. Unless you stay single and childless for life you never fully own your home.


The only benefits to a mortgage I see is living rent free as a pensioner or renting out the house at a rate higher than the mortgage. When there’s the back-up of a parental home, I don’t see the big incentive to buy a house. Everyone suggesting “What if the will changes, fall out with your sister etc.”, but no one discussing the risk of homeownership, “What if interest rates rise, what if your partner divorces you etc.”

Deeec

OP why dont your parents leave their house to you instead of your sister. The scenario of your sister inheriting the house and giving you a lifetime residence ( rent free ) makes no sense. Can you clarify why your parents are leaving their house to your sister and not you?

awec

HamSarris wrote: »

The main problems with I have with mortgages:

Interest payments are dead money. Outside of Dublin, it’s easy to rent a room and sometimes even a full apartment for less than the interest payments of a mortgage.

You may build up equity in a property but unless you intend on sizing down one day, it’s only paper equity than you can’t use to purchase anything else. Your children may enjoy it one day but not you.

You could be stuck with an illiquid asset due to negative equity or your location. Career opportunities may emerge but you have to turn them down because you’re married to your house.


And the worst part of a mortgage – you’ve just paid it off and you’re partner decides thay want a divorce and you have to move out. Unless you stay single and childless for life you never fully own your home.


The only benefits to a mortgage I see is living rent free as a pensioner or renting out the house at a rate higher than the mortgage. When there’s the back-up of a parental home, I don’t see the big incentive to buy a house. Everyone suggesting “What if the will changes, fall out with your sister etc.”, but no one discussing the risk of homeownership, “What if interest rates rise, what if your partner divorces you etc.”

Security is the biggest factor. For anyone with a family a mortgage brings security and stability which is the number one concern. Renting is neither secure nor stable.

I would not want to be trying to rent a house for a family right now. The prices are eye watering.

I think you're looking at it through the lens of someone young and single rather than looking at the bigger, longer term picture.

HamSarris

HamSarris wrote: »

The main problems with I have with mortgages:

Interest payments are dead money. Outside of Dublin, it’s easy to rent a room and sometimes even a full apartment for less than the interest payments of a mortgage.

Got some examples?

Just had a look where I am, cheapest 2-bed apartment is €990 a month. A €250k house with €225k mortgage would cost €936 a month. And instead of being in an apartment block with at least one drug dealer (that I know of) you can have a semi-D or even a small detached house.
To buy the apartment mentioned above (including management fees) would be around €550 a month.

awec

Deeec wrote: »

OP why dont your parents leave their house to you instead of your sister. The scenario of your sister inheriting the house and giving you a lifetime residence ( rent free ) makes no sense. Can you clarify why your parents are leaving their house to your sister and not you?

Or even go 50/50 and sell the gaff. Makes way more sense.

Geuze

fairyribbon wrote: »

I’m at that age when all my peers are saving and getting mortgages. Am I mad for not wanting to jump on board? I’m worried that I’m missing out on the chance of gaining a profit in years to come.

I don't think "gaining a profit" is the main reason people buy houses?

People buy houses for various reasons, I suppose?

• security of tenure
• to be "settled"
• to avoid paying high rents, for example it's currently cheaper to repay a mortgage vs. paying rent

Geuze

fairyribbon wrote: »

I’m also curious- when people do pay off their mortgages do they tend to move and sell at 50-60 years old like they say?

No.

Sono

What is in this for your sister if she can’t sell it as you have residency for life? This sounds like a complete **** show, if I was your sister I wouldn’t want the house left to me that’s for sure, just sounds like an unwanted headache

igCorcaigh

I'm 47 and don't have a mortgage. Never wanted one. Privately renting at €850pm for a small 2 bed flat in Cork City centre.
That's cheap, have been here for 11 years, but the place is old and mould-ridden.

I want to move out, knowing that I might be paying around €1,200pm
But I'm out of work now.

I don't have any children, and think it's crazy how private rents are market driven.
I'm only looking for somewhere to sleep/live, not to own a piece of the Earth.

Geuze

HamSarris wrote: »

The main problems with I have with mortgages:

Interest payments are dead money. Outside of Dublin, it’s easy to rent a room and sometimes even a full apartment for less than the interest payments of a mortgage.

I don't know about that.

I pay 100 per week interest, so 433 per month.

The same house would be 1500 pm to rent, at least, actually I'd say more.


OK, I borrowed 50% LTV, so the 100 interest bill is not on the full house value, okay.

CelticRambler

History Queen wrote: »

But are you sure it will be rent free? I'm just wondering as I've never come across this before but the rights of residence don't stop your sister charging you rent do they?

I've come across this - first hand. My grandad left his house jointly to all his grandchildren, but with a right of residence granted to one of his son. The (off-the-shelf) terms of the will allowed my uncle to do pretty much whatever he wanted with the house, except sell it. At one point - just before the peak of the previous bubble - he asked us if he could sell it and take a cut of the sale, but there was disagreement amongst the cousins (mainly his own children) and by the time a decision was made, the property market had collapsed. He subsequently supervised the house (and garden) being stripped of anything valuable, while leaving the property taxes unpaid. In the end, he had the decency to kick the bucket and we (the grandchildren) were finally able to take possession.

As for the OP's question ... are you mad? No, not really. If the only reason you'd by buying a house/taking out a mortgage is for the equity, then there are plenty of other investment options available to you, and one of them might be more suitable or lucrative.

From the comfort of my mortgage-free life outside of Ireland, I look at the amounts people hitch themselves to and think they're mad. Then again, I can live mortage free because I did take out a mortgage back in the 90s and benefited from a property bubble in the 00s. I occasionally regret not taking a second mortgage to buy a flat in Dublin City Centre too at a time when I could have afforded it.

Still, when I read about the tens of thousands of euros that people have to save now just for a deposit on a loan that they'll be paying off for another thirty years, I cannot see the sense. There are plenty of places across Europe where you can buy a house outright for that kind of money, and never have to worry about whether property prices are going up or down.

Ms. Newbie18

fairyribbon wrote: »

I am not, I think the house will be lest to my sister but I can live in it for as long as I want. So even though I will have a roof over my head , I am feeling pressure to buy an apartment for equity purposes not really necessity. Obviously if I bought a place I would live on it I would not leave it idle.

Do you save each month? Once you have a decent amount of savings you always have the option to buy later on.

di7474

I think your situation is precarious about your future living arrangements as you will not be the owner of the house?
What if your sister passes away? Who owns the house then?
What if your parents need to avail of the fair deal scheme?

I think buying a house at anytime is a massive decision and yes you will be tied to a mortgage for about 30 years at least. At the moment house prices are probably inflated due to savings people have from several lockdowns.

In saying that I'm coming into my late 40s took out a 25 year mortgage at 25..... at the time couldn't envisage myself 25 years on but I'm almost here and glad I've paid off most of my mortgage and have the security of that!