Am I mad not wanting to get a mortgage?

fairyribbon

I’m at that age when all my peers are saving and getting mortgages. Am I mad for not wanting to jump on board? I’m worried that I’m missing out on the chance of gaining a profit in years to come. Part of me wants to just continue to rent and I keep hearing “ it’s dead money” “you won’t own the place” “your paying another person’s mortgages” which are all valid statements but the thoughts of getting into this 25-30 year loan and paying interest and everything else that comes with it seems mad to me especially as the property here seems very overpriced.
I’m also curious- when people do pay off their mortgages do they tend to move and sell at 50-60 years old like they say? I would imagine you would be less likely to move at that age.

Wildly Boaring

Surely the most common plan people have is to have the house paid off before retirement.

Then live in that house rent and mortgage free till carried out in a wooden box?

Need to factor in that house may need bit of money spent on it at say 30 years old.
That worked well for my parents, mortgage pic by say 55, save for a few years, modernise and hopefully that's that.

dubrov

If the alternative is renting in the same place then yes you are mad.

Rents are currently well above mortgages so why would you deliberately want to pay more and end up with no equity at the end.

Only reasons not to buy in this country are if you can't afford it, you are planning on moving soon or you are currently paying very cheap rent below market rates

fairyribbon

dubrov wrote: »

If the alternative is renting in the same place then yes you are mad.

Rents are currently well above mortgages so why would you deliberately want to pay more and end up with no equity at the end.

Only reasons not to buy in this country are if you can't afford it, you are planning on moving soon or you are currently paying very cheap rent below market rates

I should adD- I am planning eventually to live in my parents house rent and mortgage free

dubrov

fairyribbon wrote:

I should adD- I am planning eventually to live in my parents house rent and mortgage free

As long as you are happy with that, then no real reason to buy.

Just be aware, your parents may live into their nineties and if you meet someone you may want a place if your own in future

Wildly Boaring

fairyribbon wrote: »

I should adD- I am planning eventually to live in my parents house rent and mortgage free

Only child?

fairyribbon

Wildly Boaring wrote: »

Only child?

I am not, I think the house will be lest to my sister but I can live in it for as long as I want. So even though I will have a roof over my head , I am feeling pressure to buy an apartment for equity purposes not really necessity. Obviously if I bought a place I would live on it I would not leave it idle.

Tails142

dubrov wrote: »

If the alternative is renting in the same place then yes you are mad.

Rents are currently well above mortgages so why would you deliberately want to pay more and end up with no equity at the end.

Only reasons not to buy in this country are if you can't afford it, you are planning on moving soon or you are currently paying very cheap rent below market rates

Well a few things come to mind - the backside could fall out of the property market and you could go into negative equity, interest rates are at historic lows, these could sky rocket shooting up your mortgage repayments.

I'm saying buying isn't the no brainer move either.

House prices drop, mortgage rates go up, rents fall.

But yeah for the last maybe 10 years buying has made more sense than renting if you can do it. Talk to someone who bought in 2007 though.

Westernyelp

fairyribbon wrote:

I am not, I think the house will be lest to my sister but I can live in it for as long as I want. So even though I will have a roof over my head , I am feeling pressure to buy an apartment for equity purposes not really necessity. Obviously if I bought a place I would live on it I would not leave it idle.

That's a very dodgy assumption to make. Even if you get on wonderfully with all your family

fairyribbon

Westernyelp wrote: »

That's a very dodgy assumption to make. Even if you get on wonderfully with all your family

It’s not an assumption it has been discussed and I have seen the will.

highgiant1985

fairyribbon wrote: »

I should adD- I am planning eventually to live in my parents house rent and mortgage free

you're assuming the house will be available to you in the future. Your plan may work out but if it doesn't what will you do? e.g. what if your parents need the fair deal scheme in the future?https://www.citizensinformation.ie/en/health/health_services/health_services_for_older_people/nursing_homes_support_scheme_1.html or what if your parents fall out with you in later life or decide to give the house to someone else?

The responsible thing to do would be to plan for your own future (be that owning or renting but having a plan for how you would support yourself in retirement for that) and if you do inherit the house from your parents that's a bonus.

Grumpypants

Not mad there are loads of benefits to renting. Lower upkeep costs, you can always just up sticks and move if you need to move for work. A house does trap you to a certain extent.

But at current rent prices you would be spending less on a mortgage and building equity.

For me I just can't see how anyone could afford to rent post retirement. If the pension is 800 a month and rent is 1500-2000. You would need to have serious cash deposit and a private pension just to stay in a house.

Westernyelp

fairyribbon wrote:

It’s not an assumption it has been discussed and I have seen the will.

I don't doubt you. I'm just saying things can change for a million different reasons. In your life and for others involved.

kippy

fairyribbon wrote: »

I’m at that age when all my peers are saving and getting mortgages. Am I mad for not wanting to jump on board? I’m worried that I’m missing out on the chance of gaining a profit in years to come. Part of me wants to just continue to rent and I keep hearing “ it’s dead money” “you won’t own the place” “your paying another person’s mortgages” which are all valid statements but the thoughts of getting into this 25-30 year loan and paying interest and everything else that comes with it seems mad to me especially as the property here seems very overpriced.
I’m also curious- when people do pay off their mortgages do they tend to move and sell at 50-60 years old like they say? I would imagine you would be less likely to move at that age.

Most individuals aren't getting a mortgage to "gain a profit".
They are doing it to gain stability (generally) and are looking at the longer term.
Rentals are fine - you are paying for a service, just like any other service. It has it's positives and it's negatives - the same as owning a property.

In Ireland (generally) people have tended not to downsize in their later years or move location for a few reasons one would think.

Don't go into getting a mortgage to "gain a profit" - that's not the primary reason an individual should be using to buy a property.

beerguts

You should approach your parents regarding their will. If it is indeed left to your sister you should ensure that a provision is made that you have right of residence until your death.
It is best to hash this out now as your post infers that you are assuming this is how it will play out. Don't be naive regards an asset

highgiant1985

fairyribbon wrote: »

It’s not an assumption it has been discussed and I have seen the will.

it is an assumption... the will can be changed or per my previous post other things can happen that could impact on what you might be able to inherit.

fairyribbon

highgiant1985 wrote: »

you're assuming the house will be available to you in the future. Your plan may work out but if it doesn't what will you do? e.g. what if your parents need the fair deal scheme in the future?https://www.citizensinformation.ie/en/health/health_services/health_services_for_older_people/nursing_homes_support_scheme_1.html

or what if you're parents fall out with you in later life or decide to give the house to someone else?

The responsible thing to do would be to plan for your own future (be that owning or renting but having a plan for how you would support yourself in retirement for that) and if you do inherit the house from your parents that's a bonus.

If they don’t I will continue to rent or get a mortgage if needed.Obviously things can change, we could get into a fight , they leave the house to someone else - anything could happen. But I am just talking about the situation in the here and now.my parents have set aside enough money for if they need to go to a nursing home so I don’t have to worry about that

Antares35

highgiant1985 wrote: »

it is an assumption... the will can be changed.

Also be interested to know what the will actually states. E.g is it a right to reside, a life interest. Does OP know about tax implications etc.

punisher5112

If you can buy.... Do it....
Rent out a room or two and be quite comfortable.


It's a pity I wasn't given this advice or kick s9oner

blackbox

fairyribbon wrote: »

I am not, I think the house will be lest to my sister but I can live in it for as long as I want. So even though I will have a roof over my head , I am feeling pressure to buy an apartment for equity purposes not really necessity. Obviously if I bought a place I would live on it I would not leave it idle.

What if something happens to your sister or someone in her family and she decides to sell the house because she needs the money?

I'm not saying you need a mortgage, but you really ought to provide for yourself rather than hope to get something handed to you.

fairyribbon

beerguts wrote: »

You should approach your parents regarding their will. If it is indeed left to your sister you should ensure that a provision is made that you have right of residence until your death.
It is best to hash this out now as your post infers that you are assuming this is how it will play out. Don't be naive regards an asset

Yeah I have a right of resistance I know that as a gaurantee as of now

Bicyclette

fairyribbon wrote: »

I should adD- I am planning eventually to live in my parents house rent and mortgage free

All grand. But what happens if one or both of your parents need to go into a nursing home. And what happens if they have to stay there for years?

My grandmother, an incredible woman, went into a nursing home when she was 84. She lived until she was 98.

I understand the financial implications of a mortgage. And I think now is the wrong time to buy. The market appears to be on a surge at the moment.

But if you do buy and have a mortgage, you will be paying off equity in the house. So that even if you do sell it when you move back to your parents, you will get something out of it.

Two different scenarios:

Alf and Bert. Living in a hypothetical bubble where there is no inflation.

Alf rents a house for 1,000 a month for 12 years . He pays €144,000 in rent plus a deposit of €1,000. He leaves the house at the end of year 12 to go back to his parents. He gets his deposit of €1,000 back.

Bert buys a house for 100,000. He pays €1,000 mortgage a month for 9 years He pays €107,151 plus a deposit of €10,000. He leaves the house at the end of year 12 to go back to his parents. He gets 100,000 plus his deposit back plus the money he saved in the 3 years he wasn't paying a mortgage. Technically a further €36,000 making a sum total of €146,000

Now clearly this is a hypothetical situation and interest and inflation go up and down. But in a vaccuum, this is what would happen. And if you did move back to your parents, that €146,000 would come in nice and handy.

fairyribbon

blackbox wrote: »

What if something happens to your sister or someone in her family and she decides to sell the house because she needs the money?

I'm not saying you need a mortgage, but you really ought to provide for yourself rather than hope to get something handed to you.

Yeah that could happen.

Sheep Shagger

Is this a wind up?

Why would anyone who is going to get given a house or supposably be allowed to live in one rent free bother getting a mortgage?

kippy

Sheep Shagger wrote: »

Is this a wind up?

Why would anyone who is going to get given a house or supposably be allowed to live in one rent free bother getting a mortgage?

In case the whole thing fell through for one reason or another.
Also, the status of the poster wasn't obvious from the initial post.

fairyribbon

Antares35 wrote: »

Also be interested to know what the will actually states. E.g is it a right to reside, a life interest. Does OP know about tax implications etc.

I am aware of tax implications. A will has been made, we have a accountant and tax advisor.I have a right of residence for my life. I can live in the house for as long as needed- all my life if I want.

fairyribbon

Sheep Shagger wrote: »

Is this a wind up?

Why would anyone who is going to get given a house or supposably be allowed to live in one rent free bother getting a mortgage?

For equity reason. I won’t own the house, I just have rights of residence. The house will not be in my name.

punisher5112

fairyribbon wrote: »

For equity reason. I won’t own the house, I just have rights of residence. The house will not be in my name.

So do it, then save your a#s off and buy outright down the line

Louis Friend

To answer the OP’s question, yes, I think your mad.

Whilst rent isn’t “dead money” per se, on the basis that you’re getting accomodation in exchange for money, it kind of is when you compare the two main option.

Rents are typically higher than monthly mortgage payments. When you factor-in the 10/20% deposit, they’re probably similar.

But with one, after 20-30 years, you have nothing.

Whereas with the other, after 20-30 years, you have an asset worth hundreds of thousands of Euro and free-ish accomodation in retirement.

Yes, values can fall, but over decades they shouldn’t.

History Queen

fairyribbon wrote: »

For equity reason. I won’t own the house, I just have rights of residence. The house will not be in my name.

But are you sure it will be rent free? I'm just wondering as I've never come across this before but the rights of residence don't stop your sister charging you rent do they? Just putting myself in her shoes, if I owned a house and had the expense of maintenance I don't think I'd be happy for my sibling to live in it rent free. I wouldn't charge market rate rent but I would expect some sort of contribution towards costs.

Bicyclette

fairyribbon wrote: »

I am not, I think the house will be lest to my sister but I can live in it for as long as I want. So even though I will have a roof over my head , I am feeling pressure to buy an apartment for equity purposes not really necessity. Obviously if I bought a place I would live on it I would not leave it idle.

Just saw this.

Why would you be given a right to stay indefinitely in the house if it is being left to your sister? Do you have a disabling condition or some other reason why your sister should have to allow you stay in the house?

This is a recipe for disaster. Truthfully. Your parents would be better off leaving the house to the pair of you jointly and making sure that one of you bought the other out.

If you are in a position to rent independently, you are in a position to buy independently.

awec

In practical terms how does a right of residence work? Who pays for the maintenance and upkeep of the place?

OP: what age are you relative to your sister? It would be odd for your sister to accept a right of residence for your life if you are of a similar age, as in this instance inheriting the property is of no real benefit to her. Unless she is going to rent out rooms in it or something, or live in it also?

fairyribbon

History Queen wrote: »

But are you sure it will be rent free? I'm just wondering as I've never come across this before but the rights of residence don't stop your sister charging you rent do they? Just putting myself in her shoes, if I owned a house and had the expense of maintenance I don't think I'd be happy for my sibling to live in it rent free. I wouldn't charge market rate rent but I would expect some sort of contribution towards costs.

Yes rent free

JoChervil

OP you sound like a free spirit for whom mortgage would be an obligation, not a stability.

But it all depends on your circumstances. For example, if you are single and if you can afford renting now and buy a house later for a cash. And the place where you work and live.

I wouldn't buy a house at the moment for many reasons as well. Situation is uncertain and in such times people prefer not to keep cash, so they put it into properties. So in my opinion houses are now slightly overpriced. Also more people will be working from home, so buying now in Dublin for example, when you could buy twice cheaper elsewhere, even in a cheaper another country may be an option in the future.

And if you are single, you can meet a woman, who has a house and already pays mortgage. So selling a house would be an unnecessary hassle. And renting it out for some people might be a nightmare, if it is not yours cup of tea.

But what, if your parents know you the best, so prefer not to leave you money, only place to live. It looks like they worry you will end up homeless, so probably stability earned by you doesn't look like a valid option.

PokeHerKing

fairyribbon wrote: »

I’m at that age when all my peers are saving and getting mortgages. Am I mad for not wanting to jump on board? I’m worried that I’m missing out on the chance of gaining a profit in years to come. Part of me wants to just continue to rent and I keep hearing “ it’s dead money” “you won’t own the place” “your paying another person’s mortgages” which are all valid statements but the thoughts of getting into this 25-30 year loan and paying interest and everything else that comes with it seems mad to me especially as the property here seems very overpriced.
I’m also curious- when people do pay off their mortgages do they tend to move and sell at 50-60 years old like they say? I would imagine you would be less likely to move at that age.

Only thing I would say is dont assume you've loads of time. Life moves fast and as the years go by certain things, home ownership being one, become much harder. Nobody knows what way prices will go either and I mean nobody.

fairyribbon

awec wrote: »

In practical terms how does a right of residence work? Who pays for the maintenance and upkeep of the place?

OP: what age are you relative to your sister? It would be odd for your sister to accept a right of residence for your life if you are of a similar age, as in this instance inheriting the property is of absolutely no benefit to her.

Not sure the practical terms. My parents will
Leave money, me and my sister will all have money to contribute to the house. My sister is from me with a right of residence as she owns a house already

fairyribbon

PokeHerKing wrote: »

Only thing I would say is dont assume you've loads of time. Life moves fast and as the years go by certain things, home ownership being one, become much harder. Nobody knows what way prices will go either and I mean nobody.

Yeah my fear is housing prices will continue to soar

Housing isn't like a car where you can choose to pick something up for 2k that'll last a few years or pay €600 a month for a new yoke and everything in between.

HAP has put a high floor on rents. Where I am the cheapest just-above ****hole to rent is €1200 a month. That's more than the payments on a €300k house. Which are a lot, lot, lot nicer than the places that rent for the €1200.
Even if you're buying near the peak it might mean a "rough" year or 2 on paper but taking the example of someone who bought in 2007 (not that many people as it happens) they're halfway through a mortgage, likely have over €100k in equity built up and are still paying less than the "alternative" of renting.

awec

fairyribbon wrote: »

Not sure the practical terms. My parents will
Leave money, me and my sister will all have money to contribute to the house. My sister is from me with a right of residence as she owns a house already

So your sister is inheriting a house that she is granting you right of residence on?

Which means she cannot sell it. And she's not going to live there. This is a very odd setup.

Usually right of residence is to leave a property to someone that may have an elderly relative still living there, so that the house can't be sold until that elderly relative dies.

fairyribbon

History Queen wrote: »

But are you sure it will be rent free? I'm just wondering as I've never come across this before but the rights of residence don't stop your sister charging you rent do they? Just putting myself in her shoes, if I owned a house and had the expense of maintenance I don't think I'd be happy for my sibling to live in it rent free. I wouldn't charge market rate rent but I would expect some sort of contribution towards costs.

100% rent free. She could charge if she wanted but she does not. If she decides to in the future- I have money to pay her if needed

tom1ie

fairyribbon wrote: »

I am aware of tax implications. A will has been made, we have a accountant and tax advisor.I have a right of residence for my life. I can live in the house for as long as needed- all my life if I want.

So your sister will inherit a house that she can’t sell?

fairyribbon

awec wrote: »

So your sister is inheriting a house that she is granting you right of residence on?

Which means she cannot sell it. And she's not going to live there. This is a very odd setup.

Usually right of residence is to leave a property to someone that may have an elderly relative still living there, so that the house can't be sold until that elderly relative dies.

Well this is what my family decided on. First born got the house but she already owns a house she is happy in so in order for the house to not be left idle, I can live in it

fairyribbon

tom1ie wrote: »

So your sister will inherit a house that she can’t sell?

Pretty much. I don’t think she is interested in selling as she has her own house

awec

fairyribbon wrote: »

Well this is what my family decided on. First born got the house but she already owns a house she is happen in so in order for the house to not be left idle, I can live in it

I am going to be honest and say I don't think your sister understands what she is doing.

tom1ie

fairyribbon wrote: »

Yeah my fear is housing prices will continue to soar

If interest rates increase, mortgage repayments will increase.
Interest rate are at an all time low.
If interest rates increase more people won’t qualify for mortgages as they won’t be able to afford the repayments, hence you would imagine house prices should drop, coupled with more supply coming on stream.
However government policy will probably try and stop this somehow.

beveragelady

Why would your sister willingly inherit responsibility and expense of a house she's not going to get any benefit from? She'll be responsible for all the hassle of being a landlord except her tenant expects to live rent-free. She'll be paying LPT, insurance and all the other little expenses on this house and the one she lives in.
Unless her plan is to charge you a nominal rent, well below market value. If she does that she'll start resenting it sooner or later. Nobody would blame her for raising the rent, particularly if, as you said, you have money. Then you'll be paying market rent at a time in your life when you could have a nice manageable mortgage.
By occupying the house without paying rent you're not just getting a great deal for yourself, you're depriving your sister of the opportunity to have an income from the house.

tom1ie

fairyribbon wrote: »

Pretty much. I don’t think she is interested in selling as she has her own house

How is she going to pay the inheritance tax?

el Fenomeno

fairyribbon wrote: »

Pretty much. I don’t think she is interested in selling as she has her own house

- What if they find themselves in financial trouble?
- What if the marriage breaks down and she needs to move?
- What about when her kids grow up and the ramifications of the current crisis means they can't find a house, and she just happens to have a second house in her name?
- What if her current house is damaged beyond repair by fire or otherwise?

Keep on mind, her partner may be not as fond of you as she is, and will be in her ear for years about this asset they have worth hundreds of thousands that she's letting her sibling live in for free.

However unlikely you might think these situations are, they could happen.

HamSarris

The main problems with I have with mortgages:

Interest payments are dead money. Outside of Dublin, it’s easy to rent a room and sometimes even a full apartment for less than the interest payments of a mortgage.

You may build up equity in a property but unless you intend on sizing down one day, it’s only paper equity than you can’t use to purchase anything else. Your children may enjoy it one day but not you.

You could be stuck with an illiquid asset due to negative equity or your location. Career opportunities may emerge but you have to turn them down because you’re married to your house.


And the worst part of a mortgage – you’ve just paid it off and you’re partner decides thay want a divorce and you have to move out. Unless you stay single and childless for life you never fully own your home.


The only benefits to a mortgage I see is living rent free as a pensioner or renting out the house at a rate higher than the mortgage. When there’s the back-up of a parental home, I don’t see the big incentive to buy a house. Everyone suggesting “What if the will changes, fall out with your sister etc.”, but no one discussing the risk of homeownership, “What if interest rates rise, what if your partner divorces you etc.”

Deeec

OP why dont your parents leave their house to you instead of your sister. The scenario of your sister inheriting the house and giving you a lifetime residence ( rent free ) makes no sense. Can you clarify why your parents are leaving their house to your sister and not you?

awec

HamSarris wrote: »

The main problems with I have with mortgages:

Interest payments are dead money. Outside of Dublin, it’s easy to rent a room and sometimes even a full apartment for less than the interest payments of a mortgage.

You may build up equity in a property but unless you intend on sizing down one day, it’s only paper equity than you can’t use to purchase anything else. Your children may enjoy it one day but not you.

You could be stuck with an illiquid asset due to negative equity or your location. Career opportunities may emerge but you have to turn them down because you’re married to your house.


And the worst part of a mortgage – you’ve just paid it off and you’re partner decides thay want a divorce and you have to move out. Unless you stay single and childless for life you never fully own your home.


The only benefits to a mortgage I see is living rent free as a pensioner or renting out the house at a rate higher than the mortgage. When there’s the back-up of a parental home, I don’t see the big incentive to buy a house. Everyone suggesting “What if the will changes, fall out with your sister etc.”, but no one discussing the risk of homeownership, “What if interest rates rise, what if your partner divorces you etc.”

Security is the biggest factor. For anyone with a family a mortgage brings security and stability which is the number one concern. Renting is neither secure nor stable.

I would not want to be trying to rent a house for a family right now. The prices are eye watering.

I think you're looking at it through the lens of someone young and single rather than looking at the bigger, longer term picture.