Why do people see their home as an investment?

Tassotti

Hi Lynz..

How do you see that you are going to pay off the capital on your house?

I have IO mortgages but only on rented properties

lynzpower

Oh dont worry about me Tassotti, Im selling it and have a few little ideas up my sleeve on how to proceed. I was stupid to have come this way in all honesty, it was the only thing I could get being shared ownership & a single person. ( IO on a SO, DEAD MONEY!!) However, I have managed to get myself a fiancee since buying it, so we are hoping to get a repayment mortgage somewhere cheaper, in due course. Although we may rent for a while, we just have to see how the land lies for now.

I was naive enough to think it was an "investment" then, but im certainly not that naive now. thank god for MSE!

clutton_2

Robert Kiyosaki (author or Rich Dad Poor Dad) calls a home a liability - as it costs you money each month in mortgage payments, and you get no income from it; but, if you buy a second property and rent it out (rent paying more than the mortgage re-payments) then he sees that property as an asset - makes sense to me.

lynzpower

CAn anyone give me a copy of rich dad poor dad. Everyones on about it on here. Although is the only person making any money out of it the author?

Gorgeous_George

I think between investment and liability is a middle ground that's neutral i.e., neither a liability nor an investment. I wonder what it's called?

A liavestment or an invesability

I suppose we all need somewhere to live so if a home is a liability that we are burdened with, we may as well make it as neutral as possible.

Anybody wanna buy me book?



GG

Claire_DC

I would never ever consider an interest only mortgage. We were offered by the bank to pay interest only for the first 3 years on a mortgage we looked into (especially for first time buyers apparantly). I think it's wrong though, as it's basically throwing your money away for the first 3 years when you could pay just a tiny bit extra and actually be paying something off your borrowings.

I think of the house we bought primarily as a home, but i do think of it as an investment too as we have invested time and money into it and being a property owner will allow us a retirement that is hopefully a bit more comfortable as we won't be paying through the nose to rent forever more.

I know that property does need upkeep and maintaining, but it's not going to be every month and probably not as much as yearly rental charges either, especially if you keep on top of things as best you can.

I know that in 40 or so years time when i'm drawing my pension (how depressing, why can't we stay young lol) that i will feel better, not having to worry about paying rent and keeping a roof over my head.

lynzpower

Is it only a "tiny bit extra" for yuo ClaireDC, It was almost 450 pcm difference for me and my mortgage is relitavely tiny cos I am in SO?

Sorry to take this offf-topic

seabiscuit_2

Thats another thought, I rented for years (not through choice) and since buying a house, Ive discovered that our mortgage payments (not interest only either) are less that the rental prices for a similar property in the area

at one point we were paying £100 less a month for a 3 bed house than a friend for their 2 bed rented in a worse area

so whats the point in paying an extra money to the landlord for his mortgage?

I can see peoples point about having to maintain the property but if you keep an eye on things and repair as soon as possible and dont let it get to a bigger job, costs can be kept down and shouldnt need huge amounts of cash very often

and frankly some of the rental properties Ive lived in have been appalling - we have had the gas board condemn the appliances and the environmental health make major complaints about it and what did the landlords do? kick us out as soon as possible to get another person in who wouldnt complain about the situation and do no repairs

lowis

difference between my IO mortgage quote and repayment was about 160 a month - a quite signifcant amount and not manageable on a single income unfortunately. plus if IO rates go up when my fix ends i still have 'room' to manage increased any payments, this would deffo not be the case on repayment.

hmm, let me see - pay the council £330 a month for rent or buy the flat for £380 a month and get myself on the ladder towards a repayment? i guess in some cases IO suits a persons situation in the short term.

silvercar

With the high cost of moving, stamp duty etc IO means you can jump to the house you want rather than make an intermediate move for the short term, then make the move you wanted in the first place and pay moving costs for a second time.

Going IO for 2-3 years rather than move now on a repayment mortgage and move again in 3 years time. But maybe I'm lucky in that my living costs are less than my income so know I can make the change in a few years time.