Buying a house without a mortgage

setmefree2

cheekymonkey20 wrote: »

But if you had the choice between renting and buying, id always say it would be best to buy if you can afford it. Like the OP

Not when house prices are falling though - that would be daft:rotfl::rotfl:It's better to rent for the moment surely;)

Frugaldom

Isn't paying a mortgage a bit like renting from the bank/building society except the deposit is much bigger and you have extra fees, insurances, maintenance etc on top? You're still paying out for up to [strike]25[/strike] [strike]30[/strike] [strike]35[/strike] 40 years :eek: without owning anything, whereas renters have the option to live well within their means, upgrading or downsizing pretty much any time they want. OK, I dare say I have a completely different lifestyle to a city-dwelling highflyer, but it is all relative. I would never need to pay half a million for a 1 bedroom flat within walking distance of the city centre when I could work from home in a 2 bedroom flat that cost me £15,000. Don't get me wrong, I did consider this option, but I would prefer peace and quiet, a good sized garden and a decent view, so I'll hold out for something I really like, as its a longterm home I'm after, not just a house.

<Rant alert, scroll on to avoid> IMO, property prices aren't being driven by inflation, interest rates or, even, the value of the actual buildings themselves, they are being power driven by [strike]the rich[/strike] availability of credit. In the cities, it's income (and credit rating) that dictates what you buy, meaning those who can't really afford to compete have been lulled into a false sense of security by being encouraged to part with every penny they have ever saved plus borrow around 5 times their salaries on the never, never. In the rural areas, locals have to compete with others buying up available properties as second homes (or BTL).

If I recall correctly, Northern Rock has pretty much always been known for 'cheap and easy money' and hey, presto! Look who was first to fall into the hands of the Government. Wasn't it this Government who got shot of any control over the Bank of England interest rates as soon as they could? Then sold off the gold reserves? Yet now they own the banks? In my humble opinion, if the banks own your property and the Government owns the banks, then the Government owns you until the day you are completely debt free and financially independent. The amount of money it is costing to bail out the banks could have been used years ago to build affordable social housing where and when people needed them, but that never happened and ... oh no! I've done it again! I keep telling myself NOT to drag out the soap box... just keep quiet, keep earning in whatever way I can, keep saving ... sorry

Edited in as an afterthought - if the above is wrong, why don't we see names from Britain's rich list buying up entire villages or towns? What was that about PPP, PFI and any other initiative?

setmefree2

That's all true and now the credit bubble has burst and house prices will fall to an affordable rate, and that will be good for you:D. Keep up the good work...:T

Frugaldom

I just found out how much the 5 bedroom fixy-up sold for - I mentioned we had gone to look at it but it was too big a project for us and way out our price range for developing. Anyway, I got the email saying that new properties had been listed for Jul-Sept period on registry so had to check it out: The property was on the market at offers over £105,000 and we already knew the seller had paid £95,000 and spent a few thousand doing immediate repairs. It sold for £105,500 :eek: This was for a 5 bedroom, 3 storey house with outbuilding and garden. OK, when we looked at it, it could easily have swallowed up another 25k in repairs but still... a fair price for anyone needing that number of rooms and prepared to put in a bit of work.

~evanesco~

I need a little bit of help/advice here. We're currently renting £340/$425 a month. After becoming debt free, hopefully next Xmas, we intend to save for a house. I'm currently deciding between saving outright or offsetting. We can save £1,700 a month from Jan '10, and house prices for the houses we've been looking at are currently £100,000 - £125,000. We could save up for 5 years and buy outright, or save for 2 years and have a £40,000 deposit and offset. I know its a long way off, but I like to ponder these things.

Frugaldom

I'm going the 'saving to buy outright' route whilst paying rent. I only wish I could find a house to rent that only cost £340 a month, it would make saving quicker and easier. I'm in this for the longterm. If the banks all end up owned by the Government than at least I won't feel like I'm renting from them if they owned my mortgage for 20 to 40 years after payng a hefty deposit and the interest rates won't affect the speed at which I pay off any loan.

Back again, sorry to be nosey but I need to ask - where are you that £340 = $425, as US conversion would be nearer $600

~evanesco~

We live in a pretty rubbish part of town, but the house is well worth it. I'm silently waiting for a rent increase, my friend 2 blocks away pays £25 p/w more. I try to not draw us to our landlords attention and just keep paying our rent. I guess saving outright takes some pretty serious discipline, and it's that which scares me most. I've not been the most disciplined financially up to now, I'm hoping I can change.

Herewegoagain

We bought our 1st house when we got married, did it up, then did the same again, then was able to buy the next one outright. It was a great feeling, we felt free, all that was ours and we had got it by hard work:D

Unfortunately I am now divorced and have started again with a mortgage, working at being mortgage free once more, and I will get there. No matter what the probs are, PMA will get me there, just accept the bumpy road and hang on in there.

Saving to get enough to buy outright must be hard, to keep motivated, I just look at my place with the sea across the road and that motivates me:D

HWGA xx

Frugaldom

Hi HWGA, I'm in similar situation - bought first time around in 80s then again in 90's expecting to be mortgage free within 20 years but, instead, divorced and starting again. Fell into the 125% trap when buying a fixy-up, so it wasn't sold until well after the divorce. The sale proceeds covered everything outstanding, including legal fees and we had a tiny bit left over, which started off the savings. Now, I'm looking at every opportunity to save and would hope to have enough for another 'fixy-up' within the next few years. HOWEVER... with all the recent credit crunching, bank collapsing, financially nighmarish news, I'm beginning to wonder how longterm this could be if the interest rates start crashing too low.

Frugaldom

Just a little update - we're downsizing on the rental from next month, so it should mean some extra savings to be made. The new house is far less rent and less council tax. Another plus point for the month - I won another £50 on the premium bonds!
I had sold most of them, but then decided to top them back up and hold on to £1000 worth, just to be on the 'safe' side. That's equivalent to 10% tax free interest, as this is 2nd win of the year. I wouldn't have got that from a bank or building society and DS's birthday money can't get touched whilst it's in bonds. (And please let me believe that there's a teeny, weeny chance it could make us millionaires before DS reaches the age of 21 )