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  • FIRST POST
    • SarahLu
    • By SarahLu 16th Apr 19, 2:39 PM
    • 48Posts
    • 3Thanks
    SarahLu
    Is it wise to buy if you have no heirs?
    • #1
    • 16th Apr 19, 2:39 PM
    Is it wise to buy if you have no heirs? 16th Apr 19 at 2:39 PM
    My partner and I are currently in the process of saving to buy our first home. We have no kids and won't be having any in future. That is certain. Our reason for wanting to buy was mainly to have financial security when we retire in so far as not needing to find money to pay rent each month. We were then going to look at options to release equity or downsize or something similar in order to get a bit of something back from what we have put in over the years, since we will have no kids to leave it to, but that is something we will have to obviously look into when the time comes.

    My question is, is it wise to buy in our circumstances or would it make more sense to rent? Having to find rent when retired does not seem appealing at all and I can't see another way around that other than owning our own home.

    So if we want to live securely in retirement and also have access to at least part of that money if possible, what would be the wisest thing to do in our situation?

    Thanks
Page 2
    • SarahLu
    • By SarahLu 16th Apr 19, 3:44 PM
    • 48 Posts
    • 3 Thanks
    SarahLu
    Completely irrelevant to the UK market.


    I am approaching retirement, never married, never had/wanted kids. I have owned my own property since I was 19. I would not have done it any other way.


    Until you live in a home that you own, you will not understand the immense feeling of security it gives you (even if you struggled with a 15% interest rate mortgage).


    One of my relatives sold out when their kids left home. Now they are sick of being pushed from one rented to the next as landlords sell up or increase rents to an uncomfortable level.


    To consider not to buy for a legacy benefit only is daft. In my own example, I will be downsizing on retirement and the equity released will be equivalent to over 15 years net salary. All tax free. Leave your house to a worthy cause but don't delay your purchase decision for something you saw on the internet that is not even relevant to the UK market.
    Originally posted by Mutton Geoff
    I'm not about to make a life decision on single article, it was just something that got me thinking and I thought I would ask the question.

    Re downsizing, we would probably be buying a small place anyway as its just the 2 of us, so I can't see us doing much of a downsize in later life. Is it sensible to buy something bigger than we need if we can afford to now, with a view to it increasing in value and then downsizing later in life?
    • MovingForwards
    • By MovingForwards 16th Apr 19, 3:46 PM
    • 776 Posts
    • 939 Thanks
    MovingForwards
    I'm going to be buying, with no kids now or in the future to leave it to, because I don't want to be retired and trying to find rent money and / or having to move.
    • bertiewhite
    • By bertiewhite 16th Apr 19, 4:15 PM
    • 1,502 Posts
    • 1,724 Thanks
    bertiewhite
    I've always been of the (maybe simplistic) opinion that my mortgage payments can come down and it will eventually be paid off by the time I'm retired.

    If I was renting, it's more likely to go up than down and I would still be paying rent until I die.
    • steampowered
    • By steampowered 16th Apr 19, 4:34 PM
    • 3,134 Posts
    • 3,157 Thanks
    steampowered
    Financially, the answer would depend on your life span.

    If you were only going to live for 5 years after retiring, you'd be financially better off selling the house and living it large for 5 years.

    However the average UK life expectancy is 81 years, and that's likely to go up, so you might expect to be retired for 20+ years.

    20+ years of paying rent would buy a lot of house! And you'd have a real problem if you got to 85 and the money ran out!

    Given that sort of timescale, most people are going to be better off buying.
    • lincroft1710
    • By lincroft1710 16th Apr 19, 4:54 PM
    • 11,756 Posts
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    lincroft1710
    Bought my first house over 40 years ago when single.
    • kerri gt
    • By kerri gt 16th Apr 19, 5:07 PM
    • 7,878 Posts
    • 53,190 Thanks
    kerri gt
    I completely agree. Do you have any advice about what the other options are if you don't leave your house to your kids?
    Originally posted by SarahLu
    Sell up, spend the equity travelling round the world while still able with final stop being Switzerland.
    Feb 2015 NSD Challenge 8/12
    JAN NSD 11/16


    • Slithery
    • By Slithery 16th Apr 19, 6:34 PM
    • 1,466 Posts
    • 2,286 Thanks
    Slithery
    If you're never going to need the space then buy the smallest place that's comfortable, then pump all of your spare money into your pension(s).

    You will get massive tax benefits plus free money from the government. My biggest regret is not starting a pension until 40. By the looks of things I'll still have 50 years of maxing my allowances before I retire.
    • getmore4less
    • By getmore4less 16th Apr 19, 7:10 PM
    • 35,544 Posts
    • 21,726 Thanks
    getmore4less
    Simple long term

    buying is cheaper than renting if you are paying(works a bit different on benefits)

    EOL is the hard part but whenever you sell up you are just where you would have been had you been renting, just with a load more money.
    Last edited by getmore4less; 17-04-2019 at 5:11 AM.
    • Marvel1
    • By Marvel1 16th Apr 19, 7:19 PM
    • 4,080 Posts
    • 4,499 Thanks
    Marvel1
    Never entered my mind when I bought single and still single, if anything I'm glad I have.
    • zagubov
    • By zagubov 16th Apr 19, 7:54 PM
    • 15,977 Posts
    • 133,130 Thanks
    zagubov
    It seems like a no-brainer. You've got to rent something AND you've got to pay off a mortgage.

    If there was a stable well-provided housing association /council house stock available we'd have choice, but instead we're relying on an extremely amateur private sector channeling the characteristics of house Hufflepuff for competence and Slytherin for avaricious price-gouging.

    So renting a house is likely to be painful and unrewarding (except to the landlord). You'll be spending your pension on your landlord's mortgage.

    You'd be better off renting the money to buy a house now in the hope that house price inflation and real inflation erode your debt and inflate the value of your newly-acquired asset. You may then be able to use it to fund care or even a good retirement somewhere warmer cheaper and nicer in your old age. You could even change its layout

    And that chap on the website makes good sense but he lives in a country where land and building materials are cheap outside the big cities.
    There is no honour to be had in not knowing a thing that can be known - Danny Baker
    • FreeBear
    • By FreeBear 16th Apr 19, 10:52 PM
    • 2,359 Posts
    • 3,200 Thanks
    FreeBear
    I am approaching retirement, never married, never had/wanted kids.
    Originally posted by Mutton Geoff

    I still have some way to go until I retire. Never had the urge to get married or have children (can always borrow someone else's if I need a reminder as to why). Own my own house, and can do what I like without having to seek permission from anyone including a landlord.
    Her courage will change the world.

    Treasure the moments that you have. Savour them for as long as you can for they will never come back again.
    • Gwendo40
    • By Gwendo40 17th Apr 19, 5:09 AM
    • 276 Posts
    • 297 Thanks
    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
    • By onwards&upwards 17th Apr 19, 6:28 AM
    • 216 Posts
    • 408 Thanks
    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
    • By AnotherJoe 17th Apr 19, 6:30 AM
    • 13,500 Posts
    • 15,961 Thanks
    AnotherJoe
    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!
    Originally posted by 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 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. .
    Please dont criticise my spelling. It's excellent. Its my typing that's bad.
    • harz99
    • By harz99 17th Apr 19, 6:41 AM
    • 2,803 Posts
    • 2,759 Thanks
    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
    • By AnotherJoe 17th Apr 19, 6:45 AM
    • 13,500 Posts
    • 15,961 Thanks
    AnotherJoe
    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...
    Originally posted by SarahLu
    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.
    Please dont criticise my spelling. It's excellent. Its my typing that's bad.
    • Yellow_mango
    • By Yellow_mango 17th Apr 19, 6:55 AM
    • 92 Posts
    • 81 Thanks
    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 its hard to look at that huge mortgage payment going out and not want to reduce it though.

    Right now unfortunately were not doing much of either. We only completed on the house last month, so its 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 well be able to start putting something away again.
    Last edited by Yellow_mango; 17-04-2019 at 7:58 AM. Reason: Fixing quote
    • Mutton Geoff
    • By Mutton Geoff 17th Apr 19, 7:34 AM
    • 1,362 Posts
    • 1,523 Thanks
    Mutton Geoff
    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. .
    Originally posted by AnotherJoe

    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.
    Compensation/Refunds - 4,655 | Stooz Profits - 7,636 | Quidco - 4,060 | Tax Avoidance - 107,000
    All with a big thank you to Martin and MSE.com from Mutton Geoff!
    • harz99
    • By harz99 17th Apr 19, 9:49 AM
    • 2,803 Posts
    • 2,759 Thanks
    harz99
    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. .
    Originally posted by AnotherJoe
    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
    • By AnotherJoe 17th Apr 19, 9:59 AM
    • 13,500 Posts
    • 15,961 Thanks
    AnotherJoe
    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.
    Originally posted by harz99

    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"
    Please dont criticise my spelling. It's excellent. Its my typing that's bad.
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