Why do we want to own a house?

IN_LIKE_EVERYONE_ELSE!

I just had one of those Groundhog Day kind of flashes of something, I asked myself ...

"what is the point of property ownership?"

Happy Monday.

Woby_Tide

investment
security
decorating
not having a landlord
something to talk about at dinner parties (that one is for meanmachine...)

Norbert_Colon

Decoratibility
Minimal housing expenses if/when mortgage successfully paid off

Robert_Sterling

Bought my first house £ 5500
Sold my first house £ 36000
Bought my second house £ 55000
Value now in the region of £600000

It has taken quite a long time but it looks OK.

meanmachine_2

You buy a house so that you can boast about rampant house price inflation on forums such as this one, surely?

That and the idea of "locking in" your equivalent of rental payments - unless interest rates rise, of course.

Oh, and so you can pass it on to your kids, causing arguments, when you snuff it.

But that's just a personal thing.

Robert, you forgot to finish your post:

£55000
1994 £45000
2005 £600000
2007: 300000

Yeah, well it might happen...

cattie

I've been asking myself that question fairly recently & toying with the idea of selling up & renting. However I've now realised that my mortgage payment is less than a third of what I'd have to pay out in rent for a smaller property, so I'm now really appreciating one of the big benefits of home ownership. Also in 8 years time my mortgage will be paid up & then I'll be mortgage free, yippee!

rozeepozee

meanmachine wrote:

Robert, you forgot to finish your post:

£55000
1994 £45000
2005 £600000
2007: 300000

Yeah, well it might happen...

Robert also omitted to mention the size of his mortgage (I'm not asking you to, BTW Rob) and the fact that, despite being "worth" £600000000000, it's still just a house and any cash is well and truly locked away.

Incidentally, the attraction for me with my house is my garden, but I'm not tied to it and will quite happily abandon it and let it out to strangers if I get the chance to do some travelling.

Robert_Sterling

meanmachine wrote:

Yeah, well it might happen...

A lot of things might happen.
Some are less likely than others.

black-saturn

I suppose really it was because I realised I was paying in rent the same amount that I would be paying on a mortgage. Only at the end of it all the property would be mine instead of some jumped up toss pots to sell.

westernpromise

cattie wrote:

I've been asking myself that question fairly recently & toying with the idea of selling up & renting. However I've now realised that my mortgage payment is less than a third of what I'd have to pay out in rent for a smaller property

Not strictly true. Rental yields are about 5%, and so are mortgage interest rates. So if you rent a house, it costs you 5% of its value to rent it. If you buy the same house with a 100% mortgage, it also costs you 5% of the house's value to buy it. You either rent the house, or you rent the money that buys the house.

If you sold up and rented, to fund the rent you'd have the sum you now spend on the mortgage, plus you'd have the interest income on the cash realised by the sale. At the moment, you do not receive the latter, so your estimate of the mortgage cost is understated.

Eg if your house is worth 150k and the mortgage is 50k, your monthly outlay on the mortgage might be 300 quid. To rent a place worth 100k would cost you 400 quid.

But:

If you sold up, you'd also have 100k in cash generating say 340 a month in interest. So you'd pay the first 340 of the rent using that, and then you'd have to find the other 60.

Where you were previously paying 300 you're now paying just 60. So in that example, renting would make you 240 a month better off.

The real cost of owning the house is the 300 a month on the mortgage plus the 340 in interest you forego because 100k of your money is tied up in the house.

black-saturn

Plus theres the security of knowing you can stay there as long as you like without wondering if your landlord will want you out in 6 months time.