Probably dumb question about whether buying a house is worthwhile

lisyloo

cherryduck wrote: »

Hi everyone, I'm in the process of buying my first house but wondering if it's actually worth it.


Everyone older than me keeps saying it's a great investment but is it really? I'm probably fundamentally misunderstanding something but let's say you buy a house, the value goes up, you sell it. On the surface yes you've made money but you still need somewhere to live, so what are you going to do? Buy a house.


What kind of house can you afford? Well, one worth the same you sold your first house for. Which by rights is going to be about as good as your first house surely? So what then is the point in selling? How is this an "investment"?

1) once you own it you can live in it rent free. That might seem not too important right now, but I’m 50 and I can live in my house rent free for 40 years - that’s a massive benefit.
2) if you want a comfortable and/or early retirment then having no rent/mortgage to pay is a must
3) you can do what you want with the interior
4) you won’t get chucked out as long as you make the payments

There are some downsides
1) you don’t get to control anything outside your boundary - bad neighbours, bad parking, noise etc. Can be difficult issues.
2) there’s maintenance and insurance. Usually not massive issues unless you deliberately buy a Victorian or thatched house which are costly to maintain. This is generally a much smaller coat than rent/mortgage but you do need to budget for this completely foreseeable expense.

Number 1 is the main advantage though.
The same is true of putting money into a pension.
People that don’t do it have nothing. People that do it have half a million or a million after a few decades. A massive difference over time.

My unsophisticated advice is to buy a house and contribute to a pension as soon as you can. Think of a growing snowball, initially it’s small and doesn’t grow much, ut over time it can really accumulate and make a massive difference in your 50s/60s

cherryduck

Thanks everyone for the great advice, I'm definitely seeing the upside now! I think I'm just a bit jittery at making the biggest financial commitment of my life and getting sick to death of paperwork and solicitors and all the rest, but long term this looks like the right choice.

suki1964

cherryduck wrote: »

Thanks everyone for the great advice, I'm definitely seeing the upside now! I think I'm just a bit jittery at making the biggest financial commitment of my life and getting sick to death of paperwork and solicitors and all the rest, but long term this looks like the right choice.

Its very scary taking on that amount of commitment

When we bought first time, mortgage rates were around 9% and we thought we would be eating a lot of beans and living in sleeping bags to keep warm

But after the first few months, getting to grips with a budget and making sure the basics were covered first and foremost, with a bit tucked away for a rainy day, we soon found we were back living a decent lifestyle

markin

Many people do/did make a living from it, buy the worst house on a good street, do it up, and on to the next, after 5 to 10 your final home is paid off, but they go buy a second to do up. Its getting harder with TAX but im sure many still do it.

Davesnave

"Houses are to live in as homes and not an investment!"

I hear that all the time here.

OTOH, if the family we sold to marketed our old semi dee this week, they could come and live alongside us here in rural bliss and trouser around £200-250k, tax free, without compromising on space.

True, they might not want to, but the choice is there. We never looked back.

SG27

suki1964 wrote: »

Its very scary taking on that amount of commitment

When we bought first time, mortgage rates were around 9% and we thought we would be eating a lot of beans and living in sleeping bags to keep warm

But after the first few months, getting to grips with a budget and making sure the basics were covered first and foremost, with a bit tucked away for a rainy day, we soon found we were back living a decent lifestyle

This is something to remember. At the moment rates are very very low and many people are taking on huge mortgages with tight budgets. But interest could easily go back to 6%+....

AdrianC

markin wrote: »

Many people do/did make a living from it, buy the worst house on a good street, do it up, and on to the next, after 5 to 10 your final home is paid off, but they go buy a second to do up. Its getting harder with TAX but im sure many still do it.

Something like that would always have been seen as being business activity, and the profit taxed as income tax.

MrsPorridge

DH and I have paid our mortgage off, this now means we can take early retirement this year. We plan to live in our house for two years and do some travelling and also get the hosue ready to sell. We will hopefully sell in two years and buy something smaller (it's a 4 bed detached) and we want a bungalow/smaller house - we will then use that equity we release to supplement our pensions.


Buying a house was the best financial decision we ever made.

Woodsy

cherryduck wrote: »

Hi everyone, I'm in the process of buying my first house but wondering if it's actually worth it.


Everyone older than me keeps saying it's a great investment but is it really? I'm probably fundamentally misunderstanding something but let's say you buy a house, the value goes up, you sell it. On the surface yes you've made money but you still need somewhere to live, so what are you going to do? Buy a house.


What kind of house can you afford? Well, one worth the same you sold your first house for. Which by rights is going to be about as good as your first house surely? So what then is the point in selling? How is this an "investment"?

Remember while the price of your house (hopefully) goes up you are paying off your mortgage as well so you are increasing your equity at both ends

seven-day-weekend

My son's mortgage is half the cost his neighbour pays in rent for an identical property....

....And in another 18 years he will have paid for it. Although his mortgage repayments might increase, it will be nowhere near what his neighbour's rent will increase by. After 18 years, his neighbour will still be paying rent, whilst my son will have neither rent nor mortgage to pay in his fifties.

We paid our first mortgage off, in our fifties. this coincided with my going back to work full-time, so we bought a property to rent out. This in turn was sold to partly enable us to live in Spain for a while, whilst keeping our original house (we bought a house for cash in Spain). We have now returned, have sold the original house and the Spanish house and bought a bungalow in a better area . Still mortgage free.