Buying a house without a mortgage

Frugaldom

Evening all, just popped on here to add a daft comment before settling down to watch some MSE TV. Hope you are all well and that your house-savings plans are all going well.

Having watched Grand Designs, and countless other property related programmes, I distinctly remember seeing a longboat or barge renovation project and their being mention of 'not liable for council tax'. Well, having been comparing all sorts of properties with regards to Council Tax, I now have it in good authority that ALL homes are liable, even boats, mobile homes and campervans. Can't be sure if the laws are the same throughout the UK, but Scottish law says yes, if you live in it permanently, you pay Council Tax, and if it's got no permanent parking (or mooring) then you are legally classed as homeless!

Anyway, with this in mind, I just wondered how they would assess that £25,000 nuclear bunker conversion that's advertised for sale. :rotfl:

Madcatgirl

I've just read this thread with interest. Good luck with your savings challenge!

pavlovs_dog

nykmedia wrote: »

Having watched Grand Designs, and countless other property related programmes, I distinctly remember seeing a longboat or barge renovation project and their being mention of 'not liable for council tax'. Well, having been comparing all sorts of properties with regards to Council Tax, I now have it in good authority that ALL homes are liable, even boats, mobile homes and campervans. Can't be sure if the laws are the same throughout the UK, but Scottish law says yes, if you live in it permanently, you pay Council Tax, and if it's got no permanent parking (or mooring) then you are legally classed as homeless!

case in point HERE

Frugaldom

Hi Pavlovs,

I went for a look at that link and was quite shocked by it. I know it's only one side of the story but you can see that part of the problem is with society in general. In the wake of what resulted from a discussion about freegans in the MSE forums, it just seems to me that nothing is considered 'normal' unless it fits in with what the alleged majority believes is right. Imagine finding yourself homeless after spending so many years ensuring what you thought of as your home was bought and paid for! It's sad, really, that things like that can happen. I always knew that my quest for the 'good life' or some semblance of self-sufficiency (owning my own home outright and earning a living from there) would be difficult, but it has taken until now to realise that it will be seen as completely unacceptable by many. :eek:

Right now, I'm looking at the possibilty of continuing housesharing by buying a house between us, but I'm still finding out about the long term consequences of that, as it looks really complicated with regards to all the 'what ifs?' and eventualities. To get the picture, I DID have half a mortgage when I was married but divorce meant selling the house. Even if we'd had no mortgage, half the amount raised at that time would be nowhere near enough to buy a replacement home and I know that there must be thousands of people in the same boat as me (pardon the pun).

Onwards and upwards - this week it's interest payment week, next week it's Premium Bonds week and then there's still another month before the new Council Tax payments start I might have saved enough to fill my new ISA the first day it's opened in April.

How are YOU doing with your savings plans? Any hints or tips for slashing the cost of living or earning a few grand extra?

Edited in: just did a balance check and I now need to raise an extra £468.44 asap to round off my house challenge budget! :eek:

Emergency Stage 1 = 44p to make it £468
Emergency Stage 2 = £8 to make it £460
Emergency Stage 3 = £10 to make it £450 (I can live with this number)
Stage 4 = £50 to make it £400
Stage 5 = £400 to make it a nice round number
It's not so bad when I look at it this way. :rotfl:

busy_b

I now have OCD after reading this thread for the past hour! (I first responded back in November and thought I'd catch up). I can't believe that I am unable to look at a number now without rounding it up or down!!

Good Luck to all of you with this fascinating challenge !

Frugaldom

Further to my previous post, a few more pounds dropped into the 'interest' pot, once again upsetting my figures, so the latest update of 'must raise asap' is as follows:

Emergency Stage 1 = 65p to make it £383
Emergency Stage 2 = £3 to make it £380
Emergency Stage 3 = £30 to make it £350 (I can live with this number)
Stage 4 = £50 to make it £300
Stage 5 = £300 to make it a nice round number
It's not so bad when I look at it this way. :rotfl:

Mad as this may seem, it helped me pay off loads more than I would ever have thought possible in the past couple of years and it is now helping me stick rigidly to my savings plan. I can recommend financial OCD to anyone except spendaholics who feel the urge to round up the way on their spending :eek: You know how it goes... it's ONLY £7.99, so I have a couple of pounds left to spend and then it's ONLY a tenner :rotfl:

Frugaldom

Just a quick note for all fellow frugal OCD sufferers - the odd amount drove me crazy, I HAD to pay in the extra £3.65 :rotfl: Just need to sort out that other £380 now

Editing in... email update informing me of £185 cashback on it's way, only £195 to find now

Frugaldom

I keep getting asked why I don't just use my savings as a deposit and buy a cheap house with a mortgage, and I was really beginning to start asking myself the same question. So, I did a few calculations and asked a few people who should know about these things - and found out exactly why I want to be completely mortgage free.

First of all, I would like a 'fixy up' with plenty of scope to develop it into what I want longterm. This could take years and there's a limited supply of run down habitable wrecks costing in the region of £50,000

Secondly, most 'fixy-ups' are cash purchases because no reputable financial institution would lend on such buildings. As a 'fixy-up' it lacks the value necessary to secure debt against it, far less extra cash for carrying out essential repairs.

Casting all of the above aside, there is the added problem of how much the wreck of a house will cost over the period of a mortgage. As an example, I calculated a 50,000 mortgage over 25 years with an interest rate of 7.5% and assumed that all repair work would be financed by savings. (My first mortgage climbed to 14.4%, so 7.5% is not unrealistic.) Let's see how that worked out...

All fees associated with buying the house and moving - £2,000

Monthly mortgage payments - £369.50 made up of capital and interest
The interest part amounts to - £202.83 per month or, over the 25 year term of the mortgage, a whopping great £60,848.68 in interest alone! :eek: That equates to over 120% of the actual house cost!

Renovation, modernisation, redecoration etc - £25,000 (estimated at 50% of purchase price)

The above means that mortgaged over 25 years, the fixy-up would cost £137,848.68 and that's only if the £25,000 renovation figure is from savings. I would rather live in a wreck that cost me £50,000 and call it mine from day 1 Even if I do spend £25,000 doing it up, I've still only spent £77,000. I may, of course, be completely missing the point but the interest earned from £77,000 in ISAs would NOT guarantee to pay my rent for the next 25 years (or 50 years!)

So, if people can have mortgages and aim to clear them off in 2, 3 or 5 years, then I'm aiming for similar - being a mortgage free home owner one day

cashsaver

Nykmedia... what an inspiration !!!

Just stumbled upon this thread with interest as hubby and I have been speaking for a few years about buying outright and everyone we spoke to has laughed loudly at us !

I must admit that every time we get some savings together, we think we are such a long way off and it is an impossible task that we console ourselves by blowing it on faraway holidays with our 3 young kids !!! (Laughing is therefore justified).

House prices in our area (South East) are pricey.... so our one hope is for a price slump !! We are bulging out of our house so would just love a little more room to move around in.

I love the brick... what a fab idea.... would absolutely love to join you on your "buying your house outright challenge" although we are looking at around 200k and savings so far are £16 500 !!! Quite a long way to go then......... We are now determined after reading your posts to make some headway into it and this afternoon will re-calculate the budget, and tighten the reins, look at our savings accounts interest rates etc.... well done... I am re-inspired.
Hope you don't mind me tuning in to read your progress to give me a large but virtual kick up the pants toward our seemingly impossible goal !!!!

Frugaldom

Hi Cashsaver

You are more than welcome to join us here and on the 4k challenge thread, which is where I end up spending so much time that I haven't any left to go spending any cash.

I fully understand the laughter part, as I have witnessed it all too often in the past but really, when you think about it, it's just as far-fetched as having a whacking great mortgage and trying to pay it all off in 2, 3 or 5 years and, let's face it, who is laughing at that on MSE? It is completely possible to save enough to buy a house and very realistic if you already know how to live within your means and have a longterm plan. Everyone's situation is different, so your going from £16,500 to £200,000 in savings is similar to someone trying to clear a 200k mortgage. That's how I look at my plan - pretend the 60k/100k/200k whatever is a debt and aim at clearing it. The plus point is that the imaginary debt is reducing as interest is added, the opposite of a mortgage :T

I'm not a highflying, high paid exec but I live according to my means and am far happier doing this than being stressed out living by the clock. I prefer the country or coast to the city and my plan is simple. Oh, and I'm hoping to bump my savings a few pounds by having a clear out this weekend during free listing on eBay. :cool:

I think the most important point of an exercise like this is to remain focussed entirely on your goal and try to gain the support of those around you. The fact that both you and your OH are in agreement about your future is the bigest and best boost you could hope for whilst doing whatever it takes to get you there. Good luck and don't forget to post your progress :T