Pitfalls of Diligent Saving

Mickey666

Crashy_Time said:

Mickey666 said:

hazyjo said:

Home ownership isn't for everyone. If saving around £130 a month means you have to live as frugally as you say, I would sadly have to conclude it may not be for you. How would you afford to fix a roof? Call out a plumber? Replace a boiler?  Home ownership can be expensive!

Yes, home ownership can be expensive but, like-for-like, it won't be more expensive than renting because all those maintenance things you mention are already built into the rent.  If they weren't then how would the landlord be able to pay for them?

Sure, there are cashflow considerations and I imagine it's a comfortable feeling for renters to know that they won't have to suddenly pay for a new boiler when their one breaks down, but don't fool yourself by pretending that makes renting a cheaper option than buying.

Maybe they have savings, maybe they have other property providing an income, maybe they have insurance, maybe they don`t have mortgage payments because like you they bought in the early 80`s, maybe they don`t have a plan for how to pay for these repairs? Rent isn`t set by a landlord`s potential future repair costs, it is set by wages and employment levels, so anyone trying to "build in" potential future repairs into the rent is likely going to be looking at lots of voids and lots of extra council tax.

Are you seriously suggesting that landlords finance their rental properties with their own savings?  Doesn't seem like a sound business proposition to me, which is what being a private landlord is all about isn't it?

BikingBud

Mickey666 said:

 That doesn't make much sense to me.  A very effective way to "have us over a barrel" is to prevent us from being independently wealthy.  Restricting people to rented housing for their whole lives means they are always beholden to someone else for one of the most fundamental human needs - shelter, a home.  It's a very effective means of oppression and forces people to work all their lives, historically until they dropped. 

Home ownership gives people a greater degree of independence, wealth, choice.  If you really wanted to have people "over a barrel" then preventing them from owning their own homes is a very effective way to do so . . .  as it was historically in more feudal times.

Home ownership does not occur until the mortgage is paid off, and often inhibits independence, this is especially so where we find people tied to mortgages for their entire working lives by 30 and 35 year mortgages.  Yes you may be able to hang whatever wall paper or put whatever coloured bathroom suite in that you desire, however, you are still tied to many years of payments before you "own" the property.  Until you pay off the final amount you are a slave to the terms and conditions that the financial institutions may wish to enforce such as interest rates and other whims of the market. 

We recognise that for IO mortgages why do feel the concept is any different for repayment mortgages? If you owe you don't own!

moneysavinghero

AdrianC said:

moneysavinghero said:

Average age for people to buy 1st home is 31. So the average worker will have paid off their mortgage by 56.

Mmm.

Aren't most FTB mortgages 30yr these days? And, of course, what about remortgaging or moving...?

Probably. I just went along with the 25 years that Mickey stated. If it's 30 years and moving etc added on then this further reinforces my point.

Mickey666

BikingBud said:

Mickey666 said:

 That doesn't make much sense to me.  A very effective way to "have us over a barrel" is to prevent us from being independently wealthy.  Restricting people to rented housing for their whole lives means they are always beholden to someone else for one of the most fundamental human needs - shelter, a home.  It's a very effective means of oppression and forces people to work all their lives, historically until they dropped. 

Home ownership gives people a greater degree of independence, wealth, choice.  If you really wanted to have people "over a barrel" then preventing them from owning their own homes is a very effective way to do so . . .  as it was historically in more feudal times.

Home ownership does not occur until the mortgage is paid off, and often inhibits independence, this is especially so where we find people tied to mortgages for their entire working lives by 30 and 35 year mortgages.  Yes you may be able to hang whatever wall paper or put whatever coloured bathroom suite in that you desire, however, you are still tied to many years of payments before you "own" the property.  Until you pay off the final amount you are a slave to the terms and conditions that the financial institutions may wish to enforce such as interest rates and other whims of the market. 

We recognise that for IO mortgages why do feel the concept is any different for repayment mortgages? If you owe you don't own!

That's not legally correct.  The LR title defines the legal owner and that will be the mortgagor, not the lender.  A mortgage is simply a loan secured on your property, your legally-owned property.

But of course you're right that if you have a mortgage then you are a 'slave' to their repayment terms, in the same way that if you rent your home you're a 'slave' to your Landlord's terms.  The big difference, of course, is that a mortgage will eventually end, unlike renting.

[Deleted User]

BikingBud said:

Mickey666 said:

 That doesn't make much sense to me.  A very effective way to "have us over a barrel" is to prevent us from being independently wealthy.  Restricting people to rented housing for their whole lives means they are always beholden to someone else for one of the most fundamental human needs - shelter, a home.  It's a very effective means of oppression and forces people to work all their lives, historically until they dropped. 

Home ownership gives people a greater degree of independence, wealth, choice.  If you really wanted to have people "over a barrel" then preventing them from owning their own homes is a very effective way to do so . . .  as it was historically in more feudal times.

Home ownership does not occur until the mortgage is paid off, and often inhibits independence, this is especially so where we find people tied to mortgages for their entire working lives by 30 and 35 year mortgages.  Yes you may be able to hang whatever wall paper or put whatever coloured bathroom suite in that you desire, however, you are still tied to many years of payments before you "own" the property.  Until you pay off the final amount you are a slave to the terms and conditions that the financial institutions may wish to enforce such as interest rates and other whims of the market. 

We recognise that for IO mortgages why do feel the concept is any different for repayment mortgages? If you owe you don't own!

That’s not how mortgages work. A mortgage is a loan secured against the property you still own it from the outset not the lender. 

I’m not sure what point your trying to make about what “we recognise” for IO mortgages and not repayment mortgages. In both cases the mortgagor owns the property from the outset. If that weren’t the case then the mortgagee wouldn’t have to go through a lengthy legal process to call in the debt when the mortgagor falls into arrears or is one of those people with an IO mortgage, no capital repayment vehicle and their heads firmly in the sand. 

AdrianC

BikingBud said:

Home ownership does not occur until the mortgage is paid off

Nope. You own 100% of the property from completion - you just have a large debt secured against it.

Until you pay off the final amount you are a slave to the terms and conditions that the financial institutions may wish to enforce such as interest rates and other whims of the market.

Nope. You agreed to those Ts & Cs when you borrowed the money. They don't change.

We recognise that for IO mortgages why do feel the concept is any different for repayment mortgages?

The only difference between an interest only and a repayment mortgage is whether you repay any of the capital each month or not. That's why, when interest-only were common, you also took out a savings policy alongside it...

BikingBud

AdrianC said:

BikingBud said:

Home ownership does not occur until the mortgage is paid off

Nope. You own 100% of the property from completion - you just have a large debt secured against it.

Until you pay off the final amount you are a slave to the terms and conditions that the financial institutions may wish to enforce such as interest rates and other whims of the market.

Nope. You agreed to those Ts & Cs when you borrowed the money. They don't change.

We recognise that for IO mortgages why do feel the concept is any different for repayment mortgages?

The only difference between an interest only and a repayment mortgage is whether you repay any of the capital each month or not. That's why, when interest-only were common, you also took out a savings policy alongside it...

Silly me mixing up freedom, and especially freedom from debt, with ownership 

So people carry an enormous debt over a long time, hundreds of thousands of pounds for 25-35 years, seems crazy doesn't it for an asset you own. 

And you have to be able to keep up with your mortgage repayments or you could lose your home, that asset you own.

Yes, terms and conditions are set at the outset generally to take into account that the business model is about making profit for the bank   Once you sign, you're committed and unless you pay off the debt, remember ERCs or find someone else to take on the loan, remember ERCs,you are tied to those terms that are likely very favourable for the bank to allow you to claim ownership. 

There would not be mortgage prisoners if they had freedom of ownership over their house, this includes IO mortgagees. 

You are extremely unlikely to be able to demolish and rebuild, the asset you own.

New houses with restrictive clauses that limit your choices and tie you into approvals and payments for property that you own.

So freedom is not achieved until you pay off the debt, does that suit better?

If you're in the system you have to abide by the rules, there are many that are skewed against the "owner"

[Deleted User]

BikingBud said:

AdrianC said:

BikingBud said:

Home ownership does not occur until the mortgage is paid off

Nope. You own 100% of the property from completion - you just have a large debt secured against it.

Until you pay off the final amount you are a slave to the terms and conditions that the financial institutions may wish to enforce such as interest rates and other whims of the market.

Nope. You agreed to those Ts & Cs when you borrowed the money. They don't change.

We recognise that for IO mortgages why do feel the concept is any different for repayment mortgages?

The only difference between an interest only and a repayment mortgage is whether you repay any of the capital each month or not. That's why, when interest-only were common, you also took out a savings policy alongside it...

Silly me mixing up freedom, and especially freedom from debt, with ownership 

So people carry an enormous debt over a long time, hundreds of thousands of pounds for 25-35 years, seems crazy doesn't it for an asset you own. 

And you have to be able to keep up with your mortgage repayments or you could lose your home, that asset you own.

Yes, terms and conditions are set at the outset generally to take into account that the business model is about making profit for the bank   Once you sign, you're committed and unless you pay off the debt, remember ERCs or find someone else to take on the loan, remember ERCs,you are tied to those terms that are likely very favourable for the bank to allow you to claim ownership. 

There would not be mortgage prisoners if they had freedom of ownership over their house, this includes IO mortgagees. 

You are extremely unlikely to be able to demolish and rebuild, the asset you own.

New houses with restrictive clauses that limit your choices and tie you into approvals and payments for property that you own.

So freedom is not achieved until you pay off the debt, does that suit better?

If you're in the system you have to abide by the rules, there are many that are skewed against the "owner"

Are you being salty because you misunderstood how mortgages work? 

You don’t have to take 25-35 years to pay your mortgage. Besides what’s the alternative, to rent until you’ve managed to save up enough to buy a property outright? That would work out a lot more expensive for most people than a mortgage. 

Not all mortgages come with ER. and it’s not the lender that allows you to claim ownership, not sure where you’re getting that idea from. 

There are options available to do-called mortgage prisoners. They might not like the options but there are avenues open to them. 

Residential mortgages usually use the building as security so you wouldn’t be able to demolish it but there are other types of finance and mortgages available that would allow you to do that if the council gave you planning permission. 

What kind of restrictive clauses do you think new houses come with? Are you referring to leasehold properties? Those are nothing new in England or Wales. You need to consider in those cases that you are buying a lease and not bricks and mortar. 

If you don’t like the “system” you could always give being a FOTL ago. 

sammyjammy

yksi said:

hazyjo said:

Home ownership isn't for everyone. If saving around £130 a month means you have to live as frugally as you say, I would sadly have to conclude it may not be for you. How would you afford to fix a roof? Call out a plumber? Replace a boiler?  Home ownership can be expensive!

The thing is that a mortgage might be £200 per month cheaper in the first place. If you're looking at a sub-100k property you might even find it's £400 cheaper to buy than to rent. Plenty of money to call your plumber or roofer once a month. Being a renter without a choice - ie being poor - is very expensive. It leaves us looking at the mortgage calculators and knowing that we'd be better off, so we're more determined to save than ever to try to get ourselves to that position, but then thwarted by rules than seem intended to make life difficult for those who try hardest.

Your missing the point that the OP gets housing benefit to cover their rent which would no longer be payable so any mortgage payments would come out of the money there provided to eat and pay household bills with.

BikingBud

Lover_of_Lycra said:

Are you being salty because you misunderstood how mortgages work? Beware the heretic

You don’t have to take 25-35 years to pay your mortgage. Besides what’s the alternative, to rent until you’ve managed to save up enough to buy a property outright? That would work out a lot more expensive for most people than a mortgage. You don't have to but many are now forced to as it's the only way they can achieve their aspirations. I didn't profess to know which is the best as this is entirely down to individual circumstances and aspirations. Renting a flat in a tower block with others now responsible for the cost of rectifying issues with sub-standard insulation doesn't appear to be more expensive now. But they do "own" their flat and there are clear liabilities that come with it!

Not all mortgages come with ER. and it’s not the lender that allows you to claim ownership, not sure where you’re getting that idea from. The point being that until the charge against the property is paid off the lender has a massive say, that is not freedom of ownership.

There are options available to do-called mortgage prisoners. They might not like the options but there are avenues open to them. So no freedom of ownership then.

Residential mortgages usually use the building as security so you wouldn’t be able to demolish it but there are other types of finance and mortgages available that would allow you to do that if the council gave you planning permission. And how much lower are those loans when the prime asset has been removed?

What kind of restrictive clauses do you think new houses come with? Are you referring to leasehold properties? Those are nothing new in England or Wales. You need to consider in those cases that you are buying a lease and not bricks and mortar. Recent surges in issues with freeholders on private estates!

If you don’t like the “system” you could always give being a FOTL ago. 

I'm happy with how they work and that the reality is that the perceived freedom enabled by "ownership" is not what everyone expects or gets indoctrinated into. If all goes well then wonderful, cakes and BBQs in the garden, great. But most of the problems on here are because people are in difficulty due to misunderstanding what "ownership" actually enables and imposes at the same time but have they bought into the dream in full knowledge? 


FOTL - Fruit of the Loom, nice t shirts but why would I won't to be one?