to buy a house or not... suggestions, experience, help! (page 2)

St George of England

The situation may different where you live to here in the U.K. but I think renting is a mugs game. You pour money into someone else's pocket every month with nothing to show for it. We own two properties, one we live in and one we rent out which helps with income especially as we are both retired.

If you both curl your toes tomorrow I assume the mortgage will be covered by a life insurance which will pay off the outstanding debt leaving you a property to bequeath to your relatives, children or even a good chariy. (WTB&TS - ?? No, only joking!). Salaries will rise in the future and the mortgage will not sem so great.

I remember when we got married we bought a house and the mortgage was £30 a month! Relatives thought we were crazy. Over the years however, interest rates fell and house prices continued to rise. Interestingly rents also continue to rise.

Just a few personal ramblings

George

man in black

Buying a house was one of the best things that we have done.

Granted it takes a lot of effort financially and physically, but after a year or two it begins to grow on you. Just don't go crazy

on the type of house you get, stay within your means.

I know a young couple who sank EVERYTHING into a new 300,000 house here in Illinois,,,, and it didn't have air conditioning,

(they couldn't afford it) Then they both worked two jobs just to make the payment. No vacations, no fun, just pay for a huge house that

they hardly get to enjoy.

Plus as you get older you can officially start to "potter" around like an old man should,,, doing odd jobs,

plus the tax writeoff from mortgage and improvements is awesome !!!

It takes a leap of faith, but I think that it is well worth it.

Broken Promises

I’m stuck in the rental trap, but I will say this:

Be aware that interest rates are at an all-time low. Every first Tuesday of the month all mortgage owners hold their breath to see what the Reserve Bank has indicated regarded the monthly rate. I can’t see it going down again any time soon, so make sure you include in your calculations possible rate increases in the future.

Good luck whatever you decide

Aussie Oz

I don't want to be renting when retired either.

But i also have seen people struggle their whole life and go without etc all for a house. Retire and die.

Life must also be about the journey not just the destination surely!

here are some scary numbers...

In 1998 a good wage was 600 a week, i had a 74000 mortgage and repayments were $110 a week

now, a 'good' wage is still 600, the repayments per week on 230000 at 7ish % are 369 per week.

that amount is like having to pay 26% interest on the 74000 twelve years ago on the same basic wage!

real estate is now 'unreal estate'.

oz

GLTirebiter

It depends on whether real estate continues to appreciate in value, taking the rents up along with it. When I bought my first house the monthly payment was $850, a bit tough but I was able to make it.

Fast forward to last summer, looking for a place to live during the divorce. Rent for a small duplex was $850 per month--for a place smaller than that first house, with barely enough room for me plus one small bedroom for the kids on visit weekends. My point is that rent always seems go up, but the mortgage payment is pretty stable (the loan part is fixed, but the taxes and insurance do increase).

I don't know what the tax treatment is in Oz; here in the US the interest on the mortage and property taxes on the house both are deductible from your income for tax purposes. Rent is not deductible at all. So that's effectively a discount on the interest and taxes because of income tax savings. If Australian taxes have a similar provision, that's part of your rent vs. buy decision.

The down side to owning is if you're likely to move in the near future. You'll have almost none of the loan paid off, and will have to deal with selling the house (for enough to pay off the loan balance).

Finally-Free

When you pay rent your money is gone. When you pay a mortgage you build equity.

Actually, my mortgage is less than what I used to pay for rent.

W

penny2

With 10K saved so far for a deposit, there is nothing you can do at the moment because that's not enough for the banks.

So your 2 options right now are:

Spend the 10K on the holiday and forget about ever buying;
Keep saving with a view to buying in the future.

In my mind, being retired and renting is a nightmare. In Australia, you can live on a pension if you are a couple, but only if you have your own home.

I think you can take option 2 without making it stressful. Set up your plan and put it in writing. Stick to it but don't stress about it on a daily basis. Your plan should include a budget and how much you can save each week without totally cramping your lifestyle.

It's amazing where you can save when you put your mind to it and you have a goal.

penny

Broken Promises

Another idea is to work out what your budget would be if you were already had the mortgage, and then try living on that budget for six months to see if it’s do-able. The difference between your current rent and what your mortgage would be can be put away to be saved, and ultimately set aside to go towards your deposit.

You will then get a taste of what it’s like to live with a mortgage, without the legal responsibility of being stuck with one.

Aussie Oz

We have in the last few days also considered the option of buying cheap land or house/s (i am talking between 10 and 35k) in remote or dying townships in the country. They do exist. And also good old saving and carefull investments in stead of having a mortgage.

Keep renting and saving and Then 'retire or sea change' later in life to one of these little comunities or sell them etc. We wont retire rich but hopefully content. we are simple people really who could happily live in a shed when the time comes.

All we want at the end of the day is a little place that is ours that we can run our life from... we think about checking out of the whole farce of suburban home ownership as we really think the times of it making sense are pretty well over unless the property market collapses here. Buying a house made sense when the mortgage was close to the same as rent per week, but when it gets to be 2 or 3 times rent it loses its appeal.

We were on track to take 4 years to build 30 or 40 k deposit until an 'offer too good to pass up' came along, bringing with it the pressure and stress of it all!

The only way in australia for a mortgage to be cheaper than rent (talking suburbia) is if you bought the house before it went skyrocketing, or you already had a large amount of equity from a previous property.

oz

thetrueone

Allot of people in many countries are in the same situation, it seems in the last 10 years or so real-estate prices

have sored over and above actual earnings so now the in way the economies are set,

real-estate prices are still higher than what the average person could afford comfortably..

Lets just say you have to pick and chose wisely not just where and what the property is but how you can

comfortably adjust to its responsibilities.

to buy a house or not... suggestions, experience, help!

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