Mortgage - Debt?

immoral_angeluk

To me there are 2 types of debt... pointless and priority. Priority debts include mortgage, car loan etc.. the pointless debts are the ones I have with nothing to show for it.

pudding06

I didnt count the mortgage, as it will be paid off in 8 and a half years even if I dont over pay. In reality if I had added it on, and I'm sure its the same for many it would likt the figure to a really high amount and this would be very depressing. In fact I think it would have taken me much longer to get my head out of the sand if I had counted it.

And at the end of the day I paid more in rent than I do in mortgage.

pudds

immoral_angeluk

immoral_angeluk wrote:

To me there are 2 types of debt... pointless and priority. Priority debts include mortgage, car loan etc.. the pointless debts are the ones I have with nothing to show for it.

Oh and I should've said we don't have a mortgage but we have a car loan, and I don't include the car loan in our debt at the moment as that's an essential debt.. and we'll deal with paying that off quicker as soon as all our other debts are clear.

Bargain_Rzl

While I think mortgage shouldn't be counted, I think it's potentially dangerous/misleading not to include car finance. Everybody needs a roof over their head, but not everybody needs a car. For everybody who lives in a rural area/is miles from work/has mobility problems, there's one who has perfectly good access to public transport but chooses to have a car on finance anyway. And for everybody who owns a cheap runaround, there's somebody with an expensive fuel-guzzler on credit that they can't really afford. I'm not saying that's true of anybody who's posted on this thread.

I appreciate that cars are essential for some, but if people won't include them in their debts, you get the situation where somebody who considers themselves debt-free is struggling considerably more than somebody with a few grand of debt in other areas.

If I was in debt and needed a car (which I don't) I would be paying off general debt THEN car loan THEN mortgage. And somewhere between the last two, I'd be looking to build up a car fund so at some point in the future I could have a car without taking out credit for it.

sheryldoc

id deff include car.. but not my mortgage.. untill debt was cleared.. then Id try pay off mortgage as long as I wasnt penilised for this..x

DavidHM

I'd definitely include car finance in debt; you can get a functional car for just about any purpose for £800 (although with the caveat that fuel, possibly insurance - older cars are more nickable and less safe - and particularly maintenance might be higher, so it may not be financially wise).

The key issue for me is that a car is a depreciating asset. In five years' time it'll be worth no more than 25% of what you paid for it, apart from exceptional cirucumstances.

A house on the other hand should hold its value reasonably well, at least over time, and so the only things I would include are arrears and any negative equity in a debt calculation for the purposes of this forum.

If you have remortgaged then I wouldn't include it in debt, but I would still be very concerned about remortgaging debt incurred to buy depreciating consumer goods.

However once everything else is paid off then you need to get over to the Mortgage-free Wannabe forum, if only to consider whether it's worth keeping the mortgage and investing elsewhere, or paying off the mortgage altogether instead.

do_it_today!

ohhhh I wish my mortgage was under a £100k it wont be for some time so for now when I count my debt the mortgage isnt included However as soon as they are tackled then I will

gallygirl

Mrs_Sparkle wrote:

I don't count it as debt or put it in my signature. It's a "good" debt and an essential one.

Not often I disagree with you Mrs S but I do on this occasion. IMHO the only good debt is on interest free or LOB credit cards & loans - where you have sufficient savings to pay it off. Otherwise it's a drag on your resources.

Having the attitude that it's good debt is what makes so many people (me too in the past) complacent and happy to pay off over 25 years. And don't the building societies love it.....

100k 25 yrs £629 a month, total repaid £188,732.

100k £629 plus overpayment of £200 a month - paid off 10 yrs early, total repaid £149,612, saving 39k.

100k £629 plus overpayment of £400 a month - paid off 14 yrs early, total repaid £134,905, saving 53.8k.

Obviously most people couldn't op by that much from the start, but do you still think it's a good debt?????