Am I mad not wanting to get a mortgage?

Jim2007

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.

No you're not mad at all, questioning a decision that pretty much everyone on this forum just assumes is the right answer, is not foolish, you just might not get many objective answers....

If people regard their house as an investment, then why break every rule of investing to achieve it:
- Borrow to invest
- Invest in a high risk asset class
- Fail to diversify the risk
- Accept a poor rate of return given the risk
- And so on

If people were so concerned about dead money then why would they buy, maintain and operate a property that for most of their lives represent over capacity?

A well balanced and diversified portfolio should deliver an annual return of about 7 - 8% gross where as as property maybe 4 - 5%, so if you are looking for an investment why not pick the higher return with the lower risk?

Most people are buying a house because they don't have any realistic alternative if they want to get a root over their head. The construction industry and the politicians are hoping that in keeping the 'get on the property ladder' dream going, voters will not start to question a housing policy that relies on people taking on enormous debt or relying on social services to put a roof over their heads.

if you are in the lucky situation of being able to choose between the alternatives then take the time to examine all the possibilities objectively and pick which best suits you. Don't feel under any pressure to do what others are doing, everyone is not starting out from the same position.

Jim2007

di7474 wrote: »

I think your situation is precarious about your future living arrangements as you will not be the owner of the house?

Yes but a million plus Euros in the bank is a pretty good alternative... it is not a question of a house versus nothing. Nor even that you want to live in the same place.

Wanderer78

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.

Market is currently wrecked, you're probably better off staying out of it at the moment, and wait for a better situation, this is a little risky of course, but take the time to continue saving, educating yourself about the market, thinking about what you'd like to buy, and more importantly, where. There really is no true benefits in rushing such a major decision, oh and make sure you continue enjoying life in the mean time. Best of luck

Deeec

Buying your own property provides security. When you own your own house nobody can throw you out of it. I would hate to have to rent or rely on social housing when Im elderly. I cannot understand why anyone rents when they could afford a mortgage - paying rent is paying somebody elses mortgage. Op your future plans are flawed if you are relying on living in your parents house for the rest of your life - there are loads of reasons why this may not happen. If you can afford to invest in a property you should do it - this can be your back up plan if you dont get to live in your parents house rent free for the rest of your life.

slipperyox

I had mortgage clearance for 380k back in 2008.
House prices were mad, and although renting, I put off buying till end 2012.

Despite paying rent for years, I am still miles better off for it.

Buy when there is a crash (within the next year, as we are all in denial currently)

And minimise your rent in the meantime, (rent somewhere cheaper and commute).

Renting is not dead money especially compared with negative equity, and the fact you have to live somewhere anyway.

Now is the best time to sell a house, not buy.

slipperyox

slipperyox wrote: »

Buy when there is a crash (within the next year, as we are all in denial currently)

On the surface it looks like that but the floor on the rental market through HAP is what changes things. Already rents are far above what mortgage payments would be and I just saw that in my county 33% of people on HAP also receive a discretionary top-up.

awec

Jim2007 wrote: »

No you're not mad at all, questioning a decision that pretty much everyone on this forum just assumes is the right answer, is not foolish, you just might not get many objective answers....

If people regard their house as an investment, then why break every rule of investing to achieve it:
- Borrow to invest
- Invest in a high risk asset class
- Fail to diversify the risk
- Accept a poor rate of return given the risk
- And so on

If people were so concerned about dead money then why would they buy, maintain and operate a property that for most of their lives represent over capacity?

A well balanced and diversified portfolio should deliver an annual return of about 7 - 8% gross where as as property maybe 4 - 5%, so if you are looking for an investment why not pick the higher return with the lower risk?

Most people are buying a house because they don't have any realistic alternative if they want to get a root over their head. The construction industry and the politicians are hoping that in keeping the 'get on the property ladder' dream going, voters will not start to question a housing policy that relies on people taking on enormous debt or relying on social services to put a roof over their heads.

if you are in the lucky situation of being able to choose between the alternatives then take the time to examine all the possibilities objectively and pick which best suits you. Don't feel under any pressure to do what others are doing, everyone is not starting out from the same position.

Jim this may be true for an investment property but not for your home, you cannot take this sterile, purely by-the-numbers approach for your home.

Most people aren't buying a house because they have no alternative. Most people are buying a house because it is by far the most secure and stable way to provide a home for their family and their future.

StephenRy30

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 why would your parents leave the house to your sister and not be able to sell as you want to live in it rent free/mortgage free while she has to keep paying her own mortgage? I can see this going to court and getting messy and end up falling out with your sister.

You're parents should just leave the house to yourself & sister 50/50 then sell it and get your own place.
Seems like you just want to **** over your sibling so you get to live rent/mortgage fee with no worries.

Louis Friend

Jim2007 wrote: »

No you're not mad at all, questioning a decision that pretty much everyone on this forum just assumes is the right answer, is not foolish, you just might not get many objective answers....

If people regard their house as an investment, then why break every rule of investing to achieve it:
- Borrow to invest
- Invest in a high risk asset class
- Fail to diversify the risk
- Accept a poor rate of return given the risk
- And so on

If people were so concerned about dead money then why would they buy, maintain and operate a property that for most of their lives represent over capacity?

A well balanced and diversified portfolio should deliver an annual return of about 7 - 8% gross where as as property maybe 4 - 5%, so if you are looking for an investment why not pick the higher return with the lower risk?

Most people are buying a house because they don't have any realistic alternative if they want to get a root over their head. The construction industry and the politicians are hoping that in keeping the 'get on the property ladder' dream going, voters will not start to question a housing policy that relies on people taking on enormous debt or relying on social services to put a roof over their heads.

if you are in the lucky situation of being able to choose between the alternatives then take the time to examine all the possibilities objectively and pick which best suits you. Don't feel under any pressure to do what others are doing, everyone is not starting out from the same position.

You’re not comparing like with like.

The returns on property are leveraged; for example, someone might put-in €200k, but have €1m invested. Versus having €200k invested in a portfolio.

And any return is tax-free.

I think my interest bill is around €16,000 a year. That’d be €32,000 at a 100% LTV. To rent the same property would cost me way more than that.

tom1ie

[Deleted User] wrote: »

On the surface it looks like that but the floor on the rental market through HAP is what changes things. Already rents are far above what mortgage payments would be and I just saw that in my county 33% of people on HAP also receive a discretionary top-up.

Where did you find out that info?

CelticRambler

awec wrote: »

Jim this may be true for an investment property but not for your home, you cannot take this sterile, purely by-the-numbers approach for your home.

Most people aren't buying a house because they have no alternative. Most people are buying a house because it is by far the most secure and stable way to provide a home for their family and their future.

Maybe - but the OP isn't. He's been very clear that this would be purely for the investment value, because he has a home that he's quite happy with.

riclad

People buy property to live where they want, in 25-30 years the loan is paid off.
profit does not come into it.
in some case,s a mortgage is close or cheaper than renting.
a landlord can raise the rent or give you notice,
buying a property gives you security, as long as you can pay the loan.buying
property is a long term investment,
do you intend to pay rent for 20 years plus.
rents tend to go up every few years .
people buy a house as a place to live and maybe have a child.

sharpish

Back to your original question, are you mad not to want a mortgage?

I know Irish people are obsessed with homeownership. Still, we also have very little regulation in the rental sector, so getting your own home is more secure, you do not have security, the landlord can sell at any time, and the rent is likely to continue to increase. (minimum 4% under the regulation in rent pressure zones)

That said, dependent on your life stage, waiting might not be a bad idea. Buying a house and then selling to buy another house with a new partner or new location could be costly in the short term.

You appear to be both renting and living in your family home. ( which I don't doubt could be the case, you appear to mention paying rent)

In my humble opinion, the best time to buy a house is when you have the opportunity, and you feel it is sustainable. i.e. you have the deposit, you can make the payments, and you can get finance. I say sustainable to cover both you can meet the payments and feel the property will at least hold its value. That is the best the average person can do, I believe ( I slightly overpaid for my property, but the payment is very sustainable for me, and it made sense, and thankful still does. The property has nudged up in value 4 years later. For my sanity, I just need it to hold the majority of its value; selling at a loss is an option for me and my mindset if I'm making the correct long term move)

From the details you've given of your circumstance, I think you are in a good position to build up equity in a property that will be your principal primary residence so you will have an asset that you can dispose of tax efficiently, that will be a future asset for you to so as you wish.

The theory is you are paying rent, a similar amount towards a mortgage payment, in 20 -30 years, you own a house outright.

The concern I would raise is, at some point, getting a mortgage will be harder, the term of the loan will shorten, and the monthly payments increase to an unaffordable amount potently. You may qualify for a 30-year mortgage now. Still, a 15-year mortgage will have a very different monthly payment.

Are you worried if you buy a house, you'll be under obligation to live in the house, and your sister will be the sole residence in the family home? ( while legal agreements are all very well, if you had your own house, would you be under pressure to go live there)


The below isn't for everyone, but as an example, you could buy a house/apartment rent out 1-2 rooms which will likely cover the majority of the repayments, you have an asset that is being paid off ( and hopefully appreciating or holding its value), under the rent a room scheme you are not paying tax on the income from the tenants. The ideal scenario is the rent covers the mortgage, upkeep and local property tax. Suppose you'd to contribute the equivalent of your current rent and perhaps more if the economy dived for a couple of years.
In the long term, you will come out with an asset, potential future income ( renting the property during your retirement), some independent financial stability, and a home you can enjoy. Or an asset you can dispose of and ideally come out with a cash lump sum.

While you are fortunate that you have free accommodation for the rest of your life, there is an opportunity for you to acquire an asset and some financial independence.

I would get professional advice on this. You likely have access to the family accountant and tax consultant whose reputation you know. Make a prudent investment. There will be some risk and some leg work to be done; the benefits in my eyes out weigh the risks.

If you believe the market is overheated, go through the process and be in a position to strike when you feel the time is right. Given that you are not emotive on this issue, you are less likely to fall in love with a house and overpay on impulse. You are not under time pressure, so you can go to viewings and see what you like and don't like, what works and doesn't work, become familiar with areas, property types, etc.

riclad

Very few people buy property for investments or future profits
most people want to escape the rental sector, it depends where you live.
I think house prices are going up due to lack of supply
and are economy was doing well until covid happened
It may be harder to get mortgages in the future if you leave it too long
Banks expect you to have a deposit
Try and save x amount per month then if you decide to get a mortgage you ll be ready
Most people will try and buy something even if its a 1 bed apartment as most working people do not want to be paying rent
for life
There's no harm in asking the question
Does everyone need to get a mortgage?
Some country's have rent control so people will rent a flat for 20
years plus
It's sounds as if you could afford to save up a deposit if you want to

slipperyox

most thx on thread posts in accom & porperty are from frightened landlords

I Kid you not.

Wait for the house of cards to fall

irelandpride

I was the exact same as you OP until someone told me that if you can always sell your house and make a profit.

Lets say you have a 30 year mortgage, you can always sell after 20 years and be up money.

I don't plan on working past 50 and will probably sell up then instead of paying it off till I'm 59.

I'm lucky though I'm single and no kids. Renting is dead money.

GottaGetGatt

What county is the OP from?

Geuze

irelandpride wrote: »

I was the exact same as you OP until someone told me that if you can always sell your house and make a profit.

Lets say you have a 30 year mortgage, you can always sell after 20 years and be up money.

The average mortgage duration is about seven years.

I'm surprised somebody had to tell you this.

Surely all house owners know that they are free to sell their house whenever they like? Subject obviously to repaying the mortgage from the proceeds.

Many people repay the mortgage early, and move house, this is completely normal.

Note that "profit" is the wrong word here, it's a capital gain.

irelandpride

Geuze wrote: »

The average mortgage duration is about seven years.

I'm surprised somebody had to tell you this.

Surely all house owners know that they are free to sell their house whenever they like? Subject obviously to repaying the mortgage from the proceeds.

Many people repay the mortgage early, and move house, this is completely normal.

Note that "profit" is the wrong word here, it's a capital gain.

I actually didn't haha.

Explain the capital gain

DubCount

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.

Buying a home and taking on a mortgage is a Long Term game. Its hard to look forward 5 years let alone 20-30 years. That makes is scary, but is a big decision and worth a thinking through before making such a significant decision.

What I think, is that owning your own home has some big advantages. It gives you certainty that you just cant get when you rent. There is no possible eviction (as long as you pay the mortgage), and no Landlord moving in Family members in or deciding to sell etc.

A number of posts spoke of family arrangements and inheritances etc.. This is all fine, but they still leave you relying on someone else. What if parents separate and sell the family home, what happens if they require nursing home care - you are not totally free when you rely on someone else - even family.

You mention property being "overpriced". I cant say what will happen in 2021 or 2022 or even 2023. What I can say is the cost of property 30 years from now will be higher than today, as will rental costs. When you buy a home, inflation becomes your friend. In real terms that eye-watering mortgage repayment stays the same, as your salary and the cost of everything else inflates upwards.

I'm one of those 50-60 year olds you speak of. I'm never moving. I also have the costs of children in college and lots of things to consider that I didnt even dream of when I was 25. Maybe all the years of scrimping to make mortgage repayments will just go towards an inheritance for my children, or maybe I'll take an equity release and blow it all in a Vagas Casino. The point is, its my choice.

Wanderer78

DubCount wrote:

You mention property being "overpriced". I cant say what will happen in 2021 or 2022 or even 2023. What I can say is the cost of property 30 years from now will be higher than today, as will rental costs. When you buy a home, inflation becomes your friend. In real terms that eye-watering mortgage repayment stays the same, as your salary and the cost of everything else inflates upwards.

The only problem is, we ve been experiencing high property price inflation v's low wage inflation for a long time now , hence our current predicament, every younger generation coming through, ultimately ends up with more debts on their backs than previous generations, add in increasing precariousness in accommodation and employment, and you have a serious problem

wrangler

A nursing home if needed will take a third of your assets at least before you get it free, They are however prepared to wait till death to cash in

ger vallely

Op although you are assured now that your sister is fine with you living in the house she will own rent free, that can change. Believe me. I am one of two sisters, all appeared quite normal until our mother passed. My sister then showed her true colours. Our family home was left to us both with right of residence to her. She changed the locks and told me over her dead body would I get anything from our home. I mean anything, photos, she cleared out my mother's clothes before I got a chance to mourn over them. She literally changed overnight and I never saw it coming. Do not rely on anything that is not 100% in your control.

NIMAN

irelandpride wrote: »

I was the exact same as you OP until someone told me that if you can always sell your house and make a profit.

Lets say you have a 30 year mortgage, you can always sell after 20 years and be up money.

I don't plan on working past 50 and will probably sell up then instead of paying it off till I'm 59.

I'm lucky though I'm single and no kids. Renting is dead money.

Ask those who bought in 2005-->2009 about how they got on with making money on property.

Timfy

Background
I'm in my mid 50's, professional, married and have a grown up daughter and wonderful grandkids. I have been renting (through choice) all my life, in the UK and, for the past 12 years, in Ireland

Pros to renting
1) I have always lived in amazing properties, way out of the price range that a mortgage company would consider lending me.
2) Whilst I always cover all maintenance, decorating and general upkeep costs myself, if something such as the boiler goes pop it's one phone call to the landlord to fix it.
3) I bore easily and should I wish I can up sticks and move easily to another property, another town or even another country.
4) Ignoring the slum landlords in major towns, most are ordinary people trying to keep a second property on the go as an investment. Be nice to them and they are generally good to you as a renter.
5) I have zero debts or liabilities, not even a bar tab!

Cons to renting
1) No equity. The money you spend is in someone else's pocket. I have a couple of savings plans and legacy insurance policy's that will see me out and easily pay off the funeral bar bill. My daughter is a success in her own right and expects nothing from us.
2) Contract terms are a joke in this country. On the continent you can take out 99 year tenures - In Ireland you are lucky to get 12 months. I have always negotiated longer terms with my landlords.
3) In Ireland there seems to be some stigma attached to renting. If you don't have a mortgage by the age of 30 you are viewed as a failure.

Personal viewpoint
Renting to me means that instead of tying myself to a small box in the middle of a town for the next 30 years, waiting on the vagaries of the property market to see if I can re-mortgage into another box but with an extra kitchen cupboard, I can live in some amazing properties and in outstanding locations for the same (or less) cost

sportsfan90

OP do you have a partner and kids, or do you intend on having them in the future? You may have a legal right of residency in your sisters house, but I doubt they will.

Deeec

Timfy wrote: »

Background
I'm in my mid 50's, professional, married and have a grown up daughter and wonderful grandkids. I have been renting (through choice) all my life, in the UK and, for the past 12 years, in Ireland

Pros to renting
1) I have always lived in amazing properties, way out of the price range that a mortgage company would consider lending me.
2) Whilst I always cover all maintenance, decorating and general upkeep costs myself, if something such as the boiler goes pop it's one phone call to the landlord to fix it.
3) I bore easily and should I wish I can up sticks and move easily to another property, another town or even another country.
4) Ignoring the slum landlords in major towns, most are ordinary people trying to keep a second property on the go as an investment. Be nice to them and they are generally good to you as a renter.
5) I have zero debts or liabilities, not even a bar tab!

Cons to renting
1) No equity. The money you spend is in someone else's pocket. I have a couple of savings plans and legacy insurance policy's that will see me out and easily pay off the funeral bar bill. My daughter is a success in her own right and expects nothing from us.
2) Contract terms are a joke in this country. On the continent you can take out 99 year tenures - In Ireland you are lucky to get 12 months. I have always negotiated longer terms with my landlords.
3) In Ireland there seems to be some stigma attached to renting. If you don't have a mortgage by the age of 30 you are viewed as a failure.

Personal viewpoint
Renting to me means that instead of tying myself to a small box in the middle of a town for the next 30 years, waiting on the vagaries of the property market to see if I can re-mortgage into another box but with an extra kitchen cupboard, I can live in some amazing properties and in outstanding locations for the same (or less) cost

I can see why this way of life is appealing but I dont know how practical this will be in your old age. You could live to be over 100 - You will need alot alot of savings to keep paying rent. You could find yourself relying on council housing which is not a good place to be in.

Owning your own home in old age brings security - renting you are at the mercy of other people.

Timfy

Solid points, but as a tax payer all my life, I have no qualms about drawing a state pension, and my private pensions and savings should see me comfortable until the end. Once I'm immobile, senile or housebound, a small property near a hospital and a graveyard would do me fine!

I am somewhat selfish in that I want quality of life whilst I can still enjoy it, not equity when all I have left are regrets in later life.

Deeec wrote: »

I can see why this way of life is appealing but I dont know how practical this will be in your old age. You could live to be over 100 - You will need alot alot of savings to keep paying rent. You could find yourself relying on council housing which is not a good place to be in.

Owning your own home in old age brings security - renting you are at the mercy of other people.

listermint

Timfy wrote: »

Solid points, but as a tax payer all my life, I have no qualms about drawing a state pension, and my private pensions and savings should see me comfortable until the end. Once I'm immobile, senile or housebound, a small property near a hospital and a graveyard would do me fine!

I am somewhat selfish in that I want quality of life whilst I can still enjoy it, not equity when all I have left are regrets in later life.

Fair points but how will you afford rent.

In your version you'd have to work into and beyond your 70s just to stand still . And those people who are supposedly tied to a small box are living rent free and using their pensions to enjoy the quality of life without a constant worry hanging over them.

ParkRunner

That’s the key really. As long as you (and any dependants) have good health and wealth renting is a viable option. If those things fail you could end up in a bit of trouble trying to manage high rents or finding an appropriate alternative. Long term fixed interest mortgages are slowly becoming a reality in this country thankfully. Renting should be a temporary measure unless you’re going to be moving around a lot.