Why do people see their home as an investment?

funky-footprints

I only see your home as a liabilty if you are renting it .. at least by paying a mortage we have hopes of owning something and not throwing good money away.
my parents are now down sizing .... they are building a 3 bed dormer bungalow for dads 'never ever' retirement.

Shrimp_Stu

Tassotti wrote:

A House is a LIABILITY not an investment

You didn't finish that sentence off..........................
"until the mortgage necessary for its purchase has been repaid in full"

Dead_Eye_Jones

No, the mortgage is a liability. The house is an asset. Where has all the common sense gone? Negative equity asside, the house value net the mortgage is going to be a positive figure. You sell the house (pay off remaining mortgage if not already) and take benefit of capital gains. Or your children will. Its really not that hard to understand is it?

Im not sure if Tassotti is trying to be clever or is genuinly one beer short of a six pack lol. D'oh :P

lynzpower

funky-footprints wrote:

I only see your home as a liabilty if you are renting it .. at least by paying a mortage we have hopes of owning something and not throwing good money away.
my parents are now down sizing .... they are building a 3 bed dormer bungalow for dads 'never ever' retirement.

unless like many among us you have an interest only mortgage.

Doozergirl

Tassotti wrote:

So basically, until you've actually paid off the mortgage, or die, then buying a house is not an investment.

...er no. You're buying into something and (mostly) borrowing money in the hope it will pay off in the future. Long term it does seem to be a low risk investment too. You don't always expect an investment to pay out immediately.

When you put money into a pension fund, it doesn't pay out until you retire; it's still an investment. Some investments you wait longer for a return, it doesn't mean it isn't one while you're still paying in.

Someone with no mortgage is better off than someone who pays rent, so IMO home ownership is paying out a profit. Just because a home owner doesn't downsize, it doesn't mean that they haven't made money. Someone that rents just continues to pay money into someone elses bank account. You know that

Doozergirl

lynzpower wrote:

unless like many among us you have an interest only mortgage.

I call that renting!

Or, you're 'investing' the equivalent of the capital repayment elsewhere in the hope that it will pay off the balance in the future.

Tassotti

Dead_Eye_Jones wrote:

No, the mortgage is a liability. The house is an asset. Where has all the common sense gone?
Im not sure if Tassotti is trying to be clever or is genuinly one beer short of a six pack lol. D'oh :P

Err.. I think that is what I said originally (asset, liability,etc)

And I am actually 1 beer short of a 12 pack :beer:

PJD

Tassotti wrote:

My point is, though, that an investment earns you money.

How does owning a home actually earn you money (unless you downsize, and how many people actually do that?)

It's quite common i would have thought - eg, family in a family home, say 4 - 5 bedrooms, - kids move out, Mum & Dad downsize, then they've made off their 'investment'.

Doozergirl wrote:

I call that renting!

haha! I like that - although at least you're getting capital growth

lowis

i'll be 'renting' from the bank soon - better than renting from the council though, and costs about the same. plus i get to keep any profits if i 'rent' from the bank.

lynzpower

Doozergirl wrote:

I call that renting!

Or, you're 'investing' the equivalent of the capital repayment elsewhere in the hope that it will pay off the balance in the future.

Completely agree with you there Doozergirl, but just thought Id put it out there. It can NEVER be an investment for so many on IO mortgages IMHO