Another kind of Mortgage-Free Wannabe?

$$$_12

This is my approach. I don't have a house (here in London they are too expensive), rent is dirt cheap (under £250/month but place is a dive), my salary is average and I live a fairly frugal lifestyle.

I don't want a mortgage full stop so I've decided to save 2/3 of my net income until 2008 - which will give me around £60K - enough to buy a small place outright in an obscure part of Wales or move to SE Asia (and either do the same or nearly live off the interest).

Is anyone else planning anything similar? ie save as much as they can over a period of time, relocate to somewhere cheaper and bypass the mortgage completely.

The way I rationalise it is as follows - My rent seems cheaper than an IO mortgage for anything in London (I'm not ready to relocate yet), house prices in the areas where I want to live are steady or decreasing slightly and I'm earning interest on the money I'm saving.

The main risk is HPI going ballistic in the areas I want to live.

Does this make sense or am I deluding myself?

bordercars

have you thought about buy to let either where you may want to relocate to or even a cheaper area just to be in the housing market

zag2me

I had the same outlook as the OP about 5 years ago, but unfortuantly life doesnt work out like that. 5 years passed and I found that my circumstances had changed and I now wanted to own a house. Houses will always be a good investment in the long term, thats a fact, the tax advantages alone are unmatched with any other investent.

My advice would be to look into shared ownership, it spreads the risk of owning/renting 50/50 so could be worth looking into.

avondale

$$$,
I'm just opening up a holiday resort in Baghdad, first 100 investors get a harrier jump jet free LOL. In my humble opinion renting can be like throwing your money down the toilet. You end up paying maintenance fees and such like and dependant on the landlord trying to get items repaired can be a drawn out process. Obviously everybody's personal situation is different, what suits me won't necessarily suit somebody else. Only thing i would say as already stated is that bricks and mortar seem to be financially rewarding. I wish when i was in my early 20's i'd invested in a property when advised by my father instead of buying a flash car to impress the ladies( sad i know). To me the bottom line is that you are just lining the pockets of a landlord , whose getting a return and seeing his mortgage being payed off.You aren't really any better off as you have to pay coucil tax and such like. With regards to living in ASIA, i had a friend who lived in THAILAND with a Thai female. From what i understood he couldn't own or live out there all year for some reason, i believe at the time ( 1999/2000) only nationals could own properties or businesses outright. Best to check if you are deciding to go. I hope you find what you are looking for.

cattie

avondale wrote:

$$$,
With regards to living in ASIA, i had a friend who lived in THAILAND with a Thai female. From what i understood he couldn't own or live out there all year for some reason, i believe at the time ( 1999/2000) only nationals could own properties or businesses outright.

I have family who live in Thailand & they haven't encountered any problems with owning property or living in the country. It possibly depends on circumstances.

silvercar

The problem with your idea is, as you put it, your living a frugal lifestyle in a dive. Most people don't want to do that.

I'd be lucky to afford a flat not much bigger than my room at the moment.

And I really can't see my salary rising enough to allow me to move up the next rung of the housing ladder to something I'd actually want to live long term in London. As prices go up - the gaps in between get wider.

Which is why people get on the property ladder - not stay off it.

We bought in 1986, the most we could afford at the time, moved twice since and now have equity of £350k.

You have to be in it to win it.

bordercars

why not do a little research, say , what you could save per month now, then just take that amount back 5, 10 and 15 years, do the same with any property, add the interest up plus the house price increase, factor in the rent you would of recieved and see where you stand, just a guess but i reckon the property would win in every year.

Heth_2

We saved alot for our deposit, renting somewhere really quite cheap, with no proper heating and some massive cracks in the roof. I wouldn't have wanted to live like that for ages and ages, living off a minimum each month. It would have taken us ages to save up enough for a house without a mortgage anyway, and we wouldn't have been able to enjoy life in the mean time.
I'd much rather have a mortgage, which we can afford fairly easily, and which we can overpay, than not enjoy all my youth in order to own a cheap house outright in 10 years or so.