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  • FIRST POST
    • Frugaldom
    • By Frugaldom 23rd Nov 07, 8:48 PM
    • 6,136Posts
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    Frugaldom
    Buying a house without a mortgage
    • #1
    • 23rd Nov 07, 8:48 PM
    Buying a house without a mortgage 23rd Nov 07 at 8:48 PM
    Is it still possible, do you think, to aim for being mortgage free when you haven't actually got a mortgage? (I rent) Technically, that makes me, and anyone else in this situation, mortgage free, but it also makes us "home-less". So, when everyone on here is trying desperately to rid themselves of their mortgages, is there a way that us non-home owners can join in and attempt to, for example, save to buy a house outright in x number of years?

    Is it possible?
    Is it wise?
    Is it beneficial in the long run?
    I have searched and can't really find much information about this.
    Is it because it's a bad idea? :confused:

    Handy Links
    Nationwide's house value calculator
    UpMyStreet house prices
    Propertyfinder website
    Nethouseprices.com

    By searching the likes of UpMyStreet, you can locate the date a particular house was sold and the price it made. Then, by using the likes of Nationwide's house value calculator, you can estimate very roughly how much that house is likely to be worth now. There are several ways of doing this and I'll add any handy links I find to this post as I find them. Sites like Propertyfinder are handy for seeing what the current prices are in whichever location you choose, and there are still plenty of bargains to be found.
    Last edited by Frugaldom; 15-08-2008 at 7:15 PM. Reason: Adding in link
    I reserve the right NOT to spend:
    The less I spend, the more I can afford!
    Now running Frugaldom as a lifestyle social enterprise!
Page 1
    • seven-day-weekend
    • By seven-day-weekend 23rd Nov 07, 9:57 PM
    • 32,467 Posts
    • 64,304 Thanks
    seven-day-weekend
    • #2
    • 23rd Nov 07, 9:57 PM
    • #2
    • 23rd Nov 07, 9:57 PM
    If you mean save up and buy a house outright, what's wrong with that?

    i think it's a great idea if you can do it.

    However the people here who are striving to be mortgage-free are not having to do so with the amount they owe rising, which you would have to take into consideration when house prices are rising.

    Although they do fall too.

    Why not just savee up a decent deposit, get a mortgage, and then strive to pay it off. as quick as you can.

    Having said that, if I buy another property it will be a cash sale, but that's bcause I have two mortgage-free houses and am now too old and too poor to get another mortgage!

    Good luck whatever you decide.
    Member #10 of 2 savers club
    Imagine someone holding forth on biology whose only knowledge of the subject is the Book of British Birds, and you have a rough idea of what it feels like to read Richard Dawkins on theology: Terry Eagleton
    • busy b
    • By busy b 23rd Nov 07, 10:03 PM
    • 126 Posts
    • 27 Thanks
    busy b
    • #3
    • 23rd Nov 07, 10:03 PM
    • #3
    • 23rd Nov 07, 10:03 PM
    It's not a bad idea at all BUT obviously it depends where you live and what the prices are and what you can afford to save, whilst renting.

    We have friends who did exactly that. (Although we live up North where you can still get a reasonable first home for less than 100k. It's a whole different ball game South of Birmingham as I'm sure you know!)

    Our friends used their maximum ISA allowance as a saving vehicle and then bought an old mid terraced cottage in a lovely area that needed updating. (Cost 98k and sold for 138k, bought their next property for 150k outright and it's now valued at 275k). They have no mortgage and enjoy life to the full.

    They rented for many years and everyone thought they were mad but they had a plan and it worked!

    Good Luck, hope it works for you !
    • PasturesNew
    • By PasturesNew 23rd Nov 07, 10:05 PM
    • 66,224 Posts
    • 389,096 Thanks
    PasturesNew
    • #4
    • 23rd Nov 07, 10:05 PM
    • #4
    • 23rd Nov 07, 10:05 PM
    ?
    Is it possible?
    Is it wise?
    Is it beneficial in the long run?
    I have searched and can't really find much information about this.
    Is it because it's a bad idea? :confused:
    Originally posted by nykmedia
    Yes, yes, yes.

    Right now, in my opinion, is the time to start to do this.

    But in order to achieve it, you have to set an achievable target and decide on your savings vehicle.

    You will have to look at things like:
    1) House you want to buy - how much is it?
    2) How much are you earning? How much of that can you save?
    3) Can you do more than 1 job?
    4) Will your wages improve significantly?
    5) Can you stay in and eat beans with the light out for the next X years?

    For the saving:
    6) how much risk do you want to take?
    7) What are the rates on savings?
    8) Will you be investing in other ways/things to save more/quicker?
    9) What would be the tax rates on savings/investments?

    Have you started a spreadsheet to see how achievable this is?

    In my opinion, if you were to pick a house at today's price - then save for 8-10 years, you could buy it then at the same price. Because I believe prices are now falling and will fall for 5-6 years, before recovering. Which gives you about 8-10 years to save up.
    • Frugaldom
    • By Frugaldom 23rd Nov 07, 10:13 PM
    • 6,136 Posts
    • 54,178 Thanks
    Frugaldom
    • #5
    • 23rd Nov 07, 10:13 PM
    Age & status prevent a mortgage
    • #5
    • 23rd Nov 07, 10:13 PM
    Thank you for responding.

    I do realise that property prices have been rising at an incredible rate and I did, once, have a joint mortgage. However, as a divorcee who is self-employed and works from home (a 'debt free, starting to save now' one, I might add ) property within my price range is almost impossible to find. I looked at commercial mortgages and priced around for the best deals. The best interest rate deal I could find wanted 45% deposit which, on reflection, would probably be enough to buy my cheap fixy-up! Also, having had a mortgage when interest rates hit 14% + it is difficult to ignore the possibility that the same thing could happen again. It would be great for the savings, though
    I reserve the right NOT to spend:
    The less I spend, the more I can afford!
    Now running Frugaldom as a lifestyle social enterprise!
    • PasturesNew
    • By PasturesNew 23rd Nov 07, 10:22 PM
    • 66,224 Posts
    • 389,096 Thanks
    PasturesNew
    • #6
    • 23rd Nov 07, 10:22 PM
    • #6
    • 23rd Nov 07, 10:22 PM
    As a self-employed person, once you've got a few years of books under your belt, mortgaging will become easier.

    And, if you're lucky enough to have a lucrative business/skill, then your earnings will, presumably, grow steadily (perhaps exponentially?!) over the coming years.

    Save the money - you never know when a sudden change of circumstances will catapault you, no matter how briefly, into a high earning opportunity that will make the difference between "almost" and "yes".

    I spent my life being always £5k short of being able to get a mortgage - no matter what price the houses/my wages, it always seemed the closest I could get was £5k off.... until one random lucky break in 1 year. I was mortgageable and bought something/anything. However, I then had a nosedive in circumstances, so I then had the house, but couldn't afford the bills/life... clung on. Then sold.



    But I did do it once! And you might too!

    Good luck with the saving.

    P.S. I was 40 when I bought my first (er, only) house.
    • Frugaldom
    • By Frugaldom 23rd Nov 07, 11:20 PM
    • 6,136 Posts
    • 54,178 Thanks
    Frugaldom
    • #7
    • 23rd Nov 07, 11:20 PM
    • #7
    • 23rd Nov 07, 11:20 PM
    Many thanks for the responses.

    I can live on a shoestring, I use spreadsheets for everything, I'm taking full advantage of my ISA allowance, have a few premium bonds and live far enough north that there are still properties selling for under £70,000.

    I don't mind taking a few risks here and there but can't afford to risk too much. If you mean sports gambling, then no, I don't do that, but I do trade a few shares online now and again. I'm also following the 'increase your income' thread and have set myself a challenge to raise at least an extra £3,000 working from home next year. I love the threads about 'starting a cottage industry'!

    I can't save fast and I can't save much. Christmas shopping is almost exclusively from the online auctions and wherever MSE recommends bargains. I save my Tesco Points, I recycle, I save my Co-op dividend points, which are now converted into cash, and have joined several savings type groups. But none of them are major, like "how to raise £100,000 (my magic number) without borrowing it". (Please, no 'rob a bank' type jokes because I have heard them all). My conclusion is that I'll have to up my own personal money-making challenge and start a new thread. Never mind how to pay off your mortgage in 2 years, I want to buy the whole house outright. It HAS to be possible, somehow
    I reserve the right NOT to spend:
    The less I spend, the more I can afford!
    Now running Frugaldom as a lifestyle social enterprise!
    • Toto
    • By Toto 30th Nov 07, 12:26 PM
    • 6,447 Posts
    • 10,913 Thanks
    Toto
    • #8
    • 30th Nov 07, 12:26 PM
    • #8
    • 30th Nov 07, 12:26 PM
    I'm doing exactly this, I sold my house in January to pay off debts from starting our business. This was a great move because rather than spending almost 3000 in interest payments (including IO mortgage) I now pay 960 a month in rent.

    I have just done my projections for 2008 and by living on the minimum sensible amount each month (not beans on toast but not champagne and caviar either) we can save 1/4 of a price of a house. So, my aim is to buy outright in 4 years (less if we can). We do live in the expensive south but we also are lucky that we have a good income.

    Nothing makes me more determined to save every penny than seeing my % towards saving goal increase each month on my spreadsheet, no gadget, holiday or item of anything beats seeing my goal come closer and closer.

    Good luck with getting there, really we are no different to the MFW we're all aiming for the same goal, only we pay rent rather than a mortgage.


    "Everyone is a genius. But if you judge a fish on its ability to climb a tree, it will live its whole life believing that it is stupid" - Albert Einstein
    • Frugaldom
    • By Frugaldom 30th Nov 07, 9:12 PM
    • 6,136 Posts
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    Frugaldom
    • #9
    • 30th Nov 07, 9:12 PM
    • #9
    • 30th Nov 07, 9:12 PM
    Well done and good luck Toto! I can't begin to imagine being able to afford to save for a house in 4 years but I'll not say that it is impossible. Anything is possible. But right now, your monthly rent is more than my entire monthly income! LOL There's always that glimmer of hope that one of my premium bond numbers comes up with more than 50 of prizemoney and I do 'fiddle online' with some shares now and again. Apart from that, it's a case of just keep setting myself challenges and aim for success in them all
    I reserve the right NOT to spend:
    The less I spend, the more I can afford!
    Now running Frugaldom as a lifestyle social enterprise!
    • Toto
    • By Toto 30th Nov 07, 10:58 PM
    • 6,447 Posts
    • 10,913 Thanks
    Toto
    And good luck to you too. As I said, we are both self employed and are really lucky that we earn a decent living. That said, I know many times in my life when I've had nothing but didn't seem to be any poorer than when I had money. I've always spent what I earn and always seemed to be skint!

    Making the little changes have made all of the difference. Even silly tiny things like buying value custard creams instead of brand names adds to the general goal getting closer. Learning the good money habits has taken me too many years and probably cost me the price of a house. Still, it's never too late. I really do hope you get there, you're certainly on the right road x


    "Everyone is a genius. But if you judge a fish on its ability to climb a tree, it will live its whole life believing that it is stupid" - Albert Einstein
  • EdInvestor
    Is it still possible, do you think, to aim for being mortgage free when You haven't actually got a mortgage? (I rent)
    Originally posted by nykmedia

    The general theory underpinning home ownership is that you trade in the rental payment for the mortgage.

    Otherwise you are paying the landlord's mortgage for him.

    The rental payment is deemed "dead money".
    • Frugaldom
    • By Frugaldom 30th Nov 07, 11:57 PM
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    Frugaldom
    I know the rent money is 'dead' money, that's why it's so annoying to have to be stuck as a tenant on 6 month leases. I'm in my 8th address since 2001 because nobody is prepared to do longterm lets, so you can see the problems. This year, I did the cyberdosh 'frugal living' challenge throughout (it finishes on the 31st December) and have managed to live on 4,000 for a year (excluding rent & council tax but I houseshare) so I am managing to save to the point of obsession. For 2008, the challenge to keep within the 4k budget and earn an extra 3k from home means that it's possible to have a decent deposit saved soon but no chance of a mortgage because of so many housemoves and interupted business trading. I NEED to buy outright, I can't think of any other way - short of applying for council housing, which I don't consider as an option for anyone running a business from home. It's a major challenge, but one that I will stick with until I get what I want (even if it drives me loopy LOL). I am mortgage free without a house, all that has to change is the loss of those last 3 words. If they made television programmes about this sort of challenge, then it would certainly be my kind of viewing material!
    I reserve the right NOT to spend:
    The less I spend, the more I can afford!
    Now running Frugaldom as a lifestyle social enterprise!
    • setmefree2
    • By setmefree2 1st Dec 07, 7:13 AM
    • 8,847 Posts
    • 19,009 Thanks
    setmefree2
    Hi and Good Luck - Anything is possible if you believe it and want it enough. I admire your determination. All the best and keep us posted.....
    • HugoSP
    • By HugoSP 1st Dec 07, 7:42 AM
    • 2,415 Posts
    • 1,450 Thanks
    HugoSP
    If you could live anywhere in the country there are good regional opportunities out there.

    I know of someone who moved to Nottingham from Leicester in the 80s, as prices in Leicester had shot up but Nottingham was lagging.

    Result, he almost doubled his money on each house.

    On the downside you cannot guarantee that rents will stay low.

    One anicdote that I remember after having bought my first house aged 19 in Leicester was a friend I worked with telling me how much he spent on cigarettes.

    His smoking habit cost him more than my mortgage payments, including the with profits endowmant policy

    The most valuable gift my parents ever gave me was to do everything they could to prevent me from smoking. When I had this conversation I became a lot wiser and much more grateful to them. It couldn't have been easy for my dad to refrain from smoking in front of me for all those early years.
    Last edited by HugoSP; 01-12-2007 at 7:48 AM.
    Behind every great man is a good woman

    Beside this ordinary man is a great woman
    2 savings jar - now at 3.42
  • ailuro2
    Is there any way you could get a part ownership home?

    Pay rent on the bit you don't own, mortgage on the bit you do.

    There are a few of these in Dundee where I live- it does seem to make sense rather than renting the full amount and never seeing the money again.
    Member of the first Mortgage Free in 3 challenge, no.19
    Balance 19th April '07 = minus 27,640
    Balance 1st November '09 = mortgage paid off with 1903 left over. Title deeds are now ours.
    • Frugaldom
    • By Frugaldom 1st Dec 07, 8:53 AM
    • 6,136 Posts
    • 54,178 Thanks
    Frugaldom
    I'm counting a mortgage as completely out of the question. I have heard that you can negotiate a rent to buy scheme with a private landlord but I guess you would have to be renting a house that you are prepared to buy in the first place. I've also considered joint-ownership but circumstances can change at the drop of a hat, so I'm going to be hard-headed and stubborn, take the "I can do it by myself" route LOL As for debt - been there, done that, was too frugal afterwards to buy the tee shirt
    I reserve the right NOT to spend:
    The less I spend, the more I can afford!
    Now running Frugaldom as a lifestyle social enterprise!
  • sdooley
    You need to save £1000 per month to be in with a chance.
  • ailuro2
    But some house prices round here have gone up by that in the past few years.....this in a city that is usually a steady housing market that ignores the uk wide trends.

    your best hope then is to hope the market falls around the same time as you have the money available to buy your house.
    Member of the first Mortgage Free in 3 challenge, no.19
    Balance 19th April '07 = minus 27,640
    Balance 1st November '09 = mortgage paid off with 1903 left over. Title deeds are now ours.
    • Frugaldom
    • By Frugaldom 1st Dec 07, 10:27 AM
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    • 54,178 Thanks
    Frugaldom
    Well at least I get a laugh, if nothing else.
    You need to save 1000 per month to be in with a chance.
    Originally posted by sdooley
    Save 1000 a month??? I don't even EARN 1,000 a month
    I reserve the right NOT to spend:
    The less I spend, the more I can afford!
    Now running Frugaldom as a lifestyle social enterprise!
    • Toto
    • By Toto 1st Dec 07, 11:14 AM
    • 6,447 Posts
    • 10,913 Thanks
    Toto
    The general theory underpinning home ownership is that you trade in the rental payment for the mortgage.

    Otherwise you are paying the landlord's mortgage for him.

    The rental payment is deemed "dead money".
    Originally posted by EdInvestor
    That's true, but in my case the interest on a mortgage big enough to buy this house is 25% more than my rent, so in fact my landlord is saving me money.


    "Everyone is a genius. But if you judge a fish on its ability to climb a tree, it will live its whole life believing that it is stupid" - Albert Einstein
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