Probably dumb question about whether buying a house is worthwhile

hazyjo

You will also (probably!) have pay rises. My salary has more than doubled over the last 20 years. Plus you may meet someone you want to buy with (presuming you're buying alone now). There have been times when I've split with people where I've gone on to buy something for less money, but I have nearly always increased what I've borrowed due to earning significantly more money, and having paid off some of the mortgage.


I had my first mortgage for a flat in 1991 at 21. It would be unusual for me to have stayed in that one property and never moved and cleared my mortgage within 25 years. I now own a 3 bed Edwardian semi in a lovely area and have taken out loads of different mortgages over the years and moved around 7 or 8 times. Now nearly mortgage free.


My sister on the other hand is still in the same semi-detached house she bought in the '90s with the same partner, now with 3 kids. They increased the mortgage several times and have done a loft conversion and made loads of changes and improvements to their house. They bought well - something that was easily extendable, and would grow with them over the years, which is now worth in excess of £500k (they paid £70k-odd).


I now have enough equity in mine to consider downsizing when I retire and moving to a nice, but cheaper area as I won't need to commute.

Marvel1

If like mine, the value has dropped, not recovered from 2008.

However I never bought as investment, I bought it to move out, and not have hassle of landlords and moving around, my mortgage is less than rent (almost over half) Also within 10 years or less no mortgage to pay and no rent.

Bonniepurple

I bought for security. No panic over being served notice on a whim. I don’t buy to make money, but to live in. My first couple of homes were rented. I then moved to shared ownership in a nice area. Thanks to an inheritance, we were able to move to a larger house which I want to extend to future proof.

There’s pros and cons to each. The pension point is a good one - but remember if you need care currently you will lose the house. That will need to change in the future as fewer people will own property.

westernpromise

cherryduck wrote: »

I think I'm just a bit jittery at making the biggest financial commitment of my life

Not buying a house would be a bigger commitment than buying one.

molerat

SG27 wrote: »

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%+....

I never had a mortgage that cheap, I breathed a sigh of relief when it went down below 10% :eek:

_CC_

SG27 wrote: »

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%+....

Given that you can fix for 10 years at under 2.5%, I'm doubtful that is happening any time soon.

humptydumptybits

AdrianC wrote: »

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

Not if you lived in it while you were doing it up. I used to work with someone who did this, don't think I'd like to live like that but for about 10 years they would sell up, buy a wreck, live in it while doing it up and then sell and repeat. After ten years they were mortgage free and in a very nice house and no tax paid.

Crashy_Time

AdrianC wrote: »

You buy a £120k house. You borrow £100k and put £20k of your own in.
In some years, you sell that house for £150k, and buy another, bigger one for £200k. You've repaid £10k of the mortgage, so you only owe £90k, and your £20k equity has grown to £60k. You borrow £140k.
Rinse, repeat.

Then, when you get to later middle age, you realise that you've repaid all your mortgage. You now have a house that you own outright, and your monthly outgoings plunge.

You don't say how old you are, where you are in your careers, what your attitudes to the future are. But I'm guessing you're mid 20s at the oldest? Maybe career opportunities will take you to a different area. Maybe you fancy travelling. Maybe, maybe, maybe. There's a lot of variables in life - and they all affect the answer to "Should I buy a house".

But one thing's for sure - in your 50s, living in a house you own with no mortgage will be a lot better than living in a rented place.

Just be wary of taking advice online from people who bought years ago, already have mortgages, or have some vested interest in house prices going up (they own BTL maybe or bought their house at a peak price perhaps?) Like investing in the stock market you need to visualise a big drop happening and be honest with yourself about how this could affect you emotionally (and financially)

https://forums.moneysavingexpert.com/discussion/5989875/new-build-price-drop-after-exchange-advice

Sometimes you pay 120 and the next month it is worth 100, can you cope with this is if happens? And also remember that unlike most stocks houses are not liquid, you can`t just sell them when you want (when you think the market might have turned and you want to minimise losses for example) Of course the bank probably won`t lend you money for stocks so you may only have possible interest rate rises to consider (future run on the pound perhaps?)

AdrianC

Well, you could take advice from somebody who's been convinced for decades that a house price crash has been imminent...

Crashy_Time

AdrianC wrote: »

Well, you could take advice from somebody who's been convinced for decades that a house price crash has been imminent...

The person with next door going for 20k cheaper than theirs, just purchased, probably wishes they had?