Is it wise to buy if you have no heirs?

Gwendo40

This actually sounds like a good idea to me and a lot less complicated than equity release or lifetime mortgages etc...

https://www.thesun.co.uk/news/8860629/man-sells-home-posh-area-discount/

(Apologies for the Sun link)

onwards&upwards

I own, am single no kids.

It’s definitely worth it for the security and freedom/control over my own life NOW but I am 100% certain that I don’t want to be at the mercy of private landlords if I live to old age, which is very likely as family history has most people making it to mid eighties and beyond.

One reason is that my pension income is not going to be as high as my employed income, and I have absolutely no faith that when I retire in about 30-40 years there will be any such thing as a state pension, or housing benefit, or any other part of the welfare state left.

AnotherJoe

Yellow_mango wrote: »

Oh neither will I. The plan is to pay off the mortgage as quickly as possible, then put all available funds for as long as we can bear to keep working into pensions / savings to provide income in retirement. That, along with any additional income from the house (whether through renting or selling and investing the proceeds), will fund my nomad lifestyle!

That's the plan anyway. Looking further and further from reality right now, but I'm trying to keep the dream alive!

A common but flawed approach, financially you are likely to be be much better off doing it the other way round.
Focus on pensions and investments first. That gives them much more time to grow and gain from compounding whilst with the mortgage, time and inflation will take care of it anyway.
Why rush to pay off a debt at say 2% when you are gett8ng at least double that plus tax relief on top adding another 20-40%, on your investments.
Instead you are paying off the 2% debt from money that's already had anywhere from 30-50% tax taken instead of using the full 100% of that money and putting it in your pension.
And if you are a high rate taxpayer you are also gambling that high rate tax relief will be available in say 10 - 15 years time which is perhaps very optimistic. .

harz99

Long term renting is never a good idea, nothing to show for your cash at the end of the period. Buy what suits you and your budget, make a will and UPDATE it periodically as circumstances change, and in later life you can either sell up and move elsewhere, realise some equity, or simply stay put until you pass away leaving your property to a friend, charity or whatever.

AnotherJoe

SarahLu wrote: »

If you sold up would you not end up just putting most of it back into renting, assuming you lived for a reasonable time after? But at least you would be getting back the money you have put in over the years whereas currently I'm renting anyway and will never get it back...

Not necessarily. Depends on the house and cost of renting and your longevity. Maybe you'd be selling a 5 bed detached house in an expensive area to rent a one bed apartment in a care facilty ina cheaper area, and realistically you know you'll only be renting for 10 years.
Point being you have options. If you are just stuck paying rent you don't have options other than to rent somewhere cheaper.

Yellow_mango

A common but flawed approach, financially you are likely to be be much better off doing it the other way round.
Focus on pensions and investments first. That gives them much more time to grow and gain from compounding whilst with the mortgage, time and inflation will take care of it anyway.
Why rush to pay off a debt at say 2% when you are getting at least double that plus tax relief on top adding another 20-40%, on your investments.
Instead you are paying off the 2% debt from money that's already had anywhere from 30-50% tax taken instead of using the full 100% of that money and putting it in your pension.
And if you are a high rate taxpayer you are also gambling that high rate tax relief will be available in say 10 - 15 years time which is perhaps very optimistic.

You are of course completely right.

Psychologically it’s hard to look at that huge mortgage payment going out and not want to reduce it though.

Right now unfortunately we’re not doing much of either. We only completed on the house last month, so it’s all just lots of minor renovation / decoration costs, figuring out utilities etc. Hopefully in a few months the budget will settle down a bit and we’ll be able to start putting something away again.

Mutton_Geoff

AnotherJoe wrote: »

A common but flawed approach, financially you are likely to be be much better off doing it the other way round.
Focus on pensions and investments first. That gives them much more time to grow and gain from compounding whilst with the mortgage, time and inflation will take care of it anyway.
Why rush to pay off a debt at say 2% when you are gett8ng at least double that plus tax relief on top adding another 20-40%, on your investments.
Instead you are paying off the 2% debt from money that's already had anywhere from 30-50% tax taken instead of using the full 100% of that money and putting it in your pension.
And if you are a high rate taxpayer you are also gambling that high rate tax relief will be available in say 10 - 15 years time which is perhaps very optimistic. .

This is probably the single most important recommendation on the MSE website but still most people ignore it. The "mortgage free" section is full of hopefuls who are ignoring their pension needs and hammering away at clearing low cost debt.


Similar to friends that claim they are putting money into savings accounts when they are still servicing high credit card interest by not paying the full balance every month.


Many employers have a salary sacrifice pension scheme where they uplift your contributions by 10% to give back some of the employers NI they saved. If a high rate tax payer therefore puts say £1,000 into their pension via this scheme then they would see £1,100 in their fund as opposed to £580 (after tax & NI) in their pocket. Effective near doubling of money on the way in. And an even better return if they are in the artificial 60% band.

harz99

AnotherJoe wrote: »

A common but flawed approach, financially you are likely to be be much better off doing it the other way round.
Focus on pensions and investments first. That gives them much more time to grow and gain from compounding whilst with the mortgage, time and inflation will take care of it anyway.
Why rush to pay off a debt at say 2% when you are gett8ng at least double that plus tax relief on top adding another 20-40%, on your investments.
Instead you are paying off the 2% debt from money that's already had anywhere from 30-50% tax taken instead of using the full 100% of that money and putting it in your pension.
And if you are a high rate taxpayer you are also gambling that high rate tax relief will be available in say 10 - 15 years time which is perhaps very optimistic. .

In pure financial terms I agree with that view, however life is not just about financial matters. Many people may well prefer to pay their mortgage off asap simply to ensure they have and keep a place to live, long term employment security being no longer a certainty for many of the working population today.

AnotherJoe

harz99 wrote: »

In pure financial terms I agree with that view, however life is not just about financial matters. Many people may well prefer to pay their mortgage off asap simply to ensure they have and keep a place to live, long term employment security being no longer a certainty for many of the working population today.

I agree and that is why i did qualify with "in pure financial terms".
However, many people (and theres a whole forum full of them on MSE) jump straight into the "pay your mortgage off at all costs" route without even considering the alternatives.
How many of them are even aware of the "£1100 in your pension or £580 off your mortgage" trade off?

At least if they made a considered choice (and of course you can do a bit of both doesn't have to be all or nothing) , then when higher rate tax relief is abolished on pensions (next Corbyn govt perhaps? nice sound bite that would be) they can at least say "OK my bet didn't pay off cest la vie" rather than start screaming "but no one told me i was chucking away £520 a month just to pay off a debt that inflation is whittling away anyway and now I've paid the mortage off I cant do it any more"

Cakeguts

Our mortgage finished years ago. The point is that once you have paid the mortgage off and own the house there is no more money being spent on mortgage or rent. You get to live for free apart from the usual bills and maintenance. But at that point all the money that used to go into paying the mortgage can be spent on holidays if you want to.