Psychology of Home Owning

cake21

Mr_Matey wrote: »

I guess there aren't many FTBers in negative equity or people who've lost it all on this forum. Maybe they're over in "Debt-Free Wannabe" or "Bankruptcy and Living with it"?

Well I'm a FTB in serious negative equity (mortgage now c. 130% LTV :eek:), so here are my views for what it's worth

1) How did you feel when you moved in to your first place?
Really really excited. I've had to move a few times from rented accommodation when the landlord sold the property, or the landlord wanted to move back in, or my relationship ended. It was brilliant knowing that I wouldn't have to move again and that I could have my things around me rather than in storage.

2) Has owning a home limited your choices?
Not so far, but I do feel trapped in a way as I couldn't just up sticks and go and work abroad for a couple of years if the opportunity came up.

3) Has owning a home enriched your life, or do you imagine it would?

• I feel much more happy and secure as I can't be kicked out (assuming I keep up to date with my mortgage payments of course!)
• On the other hand I do worry about the maintenance - e.g. this weekend with two roof-leaks and a broken window I was nearly in tears wondering how I would get things sorted as I don't know anyone with those kind of skills.

4) How did you feel when you paid off your mortgage?
Don't know yet, but I can't wait! 2.5 years in and hope to have it paid off in the next 10 years. I think/hope I'll feel relief and even truly contented and secure.

the_ash_and_the_oak wrote: »

well tbf he was comparing an option of buying one house and living in it for 25 years with renting one house and living in it for 25 years, rather than including any other options that people may have

Harry_Powell wrote: »

Does anyone ever do that, especially these days?

Yes, me - and that was always the plan even before I found myself in negative equity :rotfl:I've always wanted a "home of my own" but never hankered after a huge house and all the trappings, I work away anyway, I hate moving house (that was a lot of the appeal of buying, so I wouldn't have to move), so I bought what I hope will be my "forever" house. Good job frankly as I can't move now anyhoo

Harry_Powell

cake21 wrote: »

Yes, me - and that was always the plan even before I found myself in negative equity :rotfl:I've always wanted a "home of my own" but never hankered after a huge house and all the trappings, I work away anyway, I hate moving house (that was a lot of the appeal of buying, so I wouldn't have to move), so I bought what I hope will be my "forever" house. Good job frankly as I can't move now anyhoo

You've only been there 2.5 years! Come back in 10 years time and we'll see if you're still in your FTB home, especially once you're out of Neg Equ and especially if that hankering for foreign climes increases.

chucknorris

Mr_Matey wrote: »

1) How did you feel when you moved in to your first place?
Great, very secure I could do what I wanted when I wanted and also relieved as the first place I bought needed fully refurbishing. Which I more or less did myself with abit of help during the year out of my sandwhich year of my degree course

2) Has owning a home limited your choices?
No, 2 years after buying it I sold up and moved down to London (from Newcastle)

3) Has owning a home enriched your life, or do you imagine it would?
Very much so especially now as we have a dog

4) How did you feel when you paid off your mortgage?
I didn't actually pay it off I paid cash, beacause as I (mature) student I could not get a mortgage

5) Any other good/bad things about owning that I've missed but you'd like to share?

I own investment property too but have limted my answers to my own home, I would never rent my main home as I feel the need to be fully in control. However we are quite likley to rent somewhere in Spain during future winters. I would like to buy somwhere there, but as the long term winter rents are so cheap it's economic madness to buy if you only want to be there during the winter.

cake21

Quizzical_Squirrel wrote: »

Why can't you though? Is it because the rent wouldn't cover the mortgage or is it a psychological reason?

Both I think. Realistic net achievable rent would be about two-thirds of the mortgage, and that's at 2.99% interest, so that's the main reason. I would also feel weird renting it out, was originally going to get a lodger but can't face it

cake21

Harry_Powell wrote: »

You've only been there 2.5 years! Come back in 10 years time and we'll see if you're still in your FTB home, especially once you're out of Neg Equ and especially if that hankering for foreign climes increases.

Good points
Although it was the intention at the outset, I would have spent / will spend a lot more on "owning" a house than if I had continued to rent, so on a purely £ consideration I wouldn't have bought.

Harry_Powell

cake21 wrote: »

Good points
Although it was the intention at the outset, I would have spent / will spend a lot more on "owning" a house than if I had continued to rent, so on a purely £ consideration I wouldn't have bought.

Neither would I (on a purely financial basis), despite the many assertions on here that 'renting is dead money' and 'I can live in my house rent free when it's paid for'. The people making these statements clearly haven't thought them through. Home ownership is an expensive hobby.

chucknorris

Harry_Powell wrote: »

Neither would I (on a purely financial basis), despite the many assertions on here that 'renting is dead money' and 'I can live in my house rent free when it's paid for'. The people making these statements clearly haven't thought them through. Home ownership is an expensive hobby.

Not im my experience Harry, the first flat I bought (originally as an investment but then later lived in it) cost 70.5k so even a 100% mortgage (100% for comparative purposes as a tenancy would not inolve such a large deposit) would be frozen at around that level, which would be about £353 per month (at say 6%) but that flat rents out now for £1,500/month (and was £1,666/month last year). The first years rent was £750/month and has doubled even with a 10% reduction last year).

I obviously agree in the early years renting will compare better but later it is much more expensive due to the fact that mortgage rates merely fluctuate but rent rises with inflation (and dramatically so over 25 years). But I didn't buy my home to save money that is a lifestyle choice, the saving is just a side benefit.

JonnyBravo

Harry_Powell wrote: »

Neither would I (on a purely financial basis), despite the many assertions on here that 'renting is dead money' and 'I can live in my house rent free when it's paid for'. The people making these statements clearly haven't thought them through. Home ownership is an expensive hobby.

Whilst I take on board your points about extra costs which need to be accounted for, I just can't make the sums for lets say 50(?) years of renting any cheaper than 25 or even 30 years paying a mortgage.
How do you work out renting is cheaper?

(oh and no I don't view renting as "dead money" etc.... each scenario is different etc)

Harry_Powell

chucknorris wrote: »

Not im my experience Harry, the first flat I bought (originally as an investment but then later lived in it) cost 70.5k so even a 100% mortgage (100% for comparative purposes as a tenancy would not inolve such a large deposit) would be frozen at around that level, which would be about £353 per month (at say 6%) but that flat rents out now for £1,500/month (and was £1,666/month last year). The first years rent was £750/month and has doubled even with a 10% reduction last year).

I obviously agree in the early years renting will compare better but later it is much more expensive due to the fact that mortgage rates merely fluctuate but rent rises with inflation (and dramatically so over 25 years). But I didn't buy my home to save money that is a lifestyle choice, the saving is just a side benefit.

Sorry chuck, I think you got the wrong end of the stick. We were discussing being an OO, not a BTL Landlord. If you didn't rent out the flat when you moved out of it and instead went down the more traditional route of buying/selling and moving up the property ladder, you would have incurred all of the costs I mentioned in an earlier post and so the financial difference between renting and buying would be much closer.

Obviously I'm also talking about people who are renting now and considering buying and have therefore missed out on the 300% HPI (or whatever it was). Though saying that, even people who saw HPI on their FTB house were then penalised by having to buy their second house at a much inflated price and therefore had a much larger mortgage.

the_ash_and_the_oak

The trading up would be with a larger mortgage but although the rungs get further apart with HPI isn't the benefit of HPI that it creates a big deposit (and if you don't buy before a period of HPI then the 2nd place gets further away anyway)

imo if you take a buy vs rent period that includes signif HPI then buying is going to beat renting of course! (If i had been old enough to buy in 2001 and then sell again in 2006 - either to tradeup or to STR then those 5 years would have made me a bundle of cash regardless of buy/sell/maintenance costs! If you choose a period without signif HPI then buying doesn't beat renting imo, so its really down to outlook - we don't know what a 2009-2014 period will bring - if you think there'll be rises it makes sense for an FTB to buy, if you don't then it doesn't imo)

And really this comparing 50 years renting with 25 years buying or whatever doesn't make sense to me if we're looking at it from the pov of an FTB buying a first rung flat. a 5 year rent vs 5 year buy makes more sense imo. If you think there's going to be signif HPI during that 5 years you've just got yourself a much bigger deposit for the tradeup - if not then you're paying more in monthly costs and putting your deposit at risk with no real gain imo

this doesn't apply if you're buying a cottage in the lake district (the 25 year rent vs 25 year buy might be more appropriate here imo)