Buying a home?

[Dannielle]

I am getting married in a little less than 2 months (eeep! ) and the questions have already begun, when are you having children? when are you buying a house? what next? etc.

I don't mind being asked about children, FI and i usually just scoff something along the lines of "give us 10 years" and people get the picture. What really bothers me is the question of when are we going to buy a house? The answer is, we are not. Not next year, not in 3 years, possibly not even in 10 years.

FI and I currently rent a 2 bedroom apartment in a fantastic area right near the beach. We pay $350. To buy this apartment our repayments would be $650. It would take us 30 years to pay it off. We calculated to buy a house it would be close to $1000 a week for a standard 3 bedroom house..

I understand that it is the "Australian dream" to own your own home, but why? FI and I rent, we don't have to worry about starta fees, water fees or maintenance and we are able to save so much money. if we purchased a house we would have little/no savings and would probably have to rely on credit in case of emergencies.

So, we are able to rent a home for almost half of what we would pay in a mortgage and we save the rest- we are happy, have a lovely place to live and have no money worries? I don't see what is wrong with that,

.. When people ask I usually explain this to people (FI just stares at them blankly because he thinks it is rude how nosey people are :p) but they still think we should buy a house. WHY? Apart from "because we should" what is a good reason?

*end rant*

Either way, I would love advice on how to explain to people that it is ok to make life choices outside the norm, or I would love a reason why we definately need to buy a house

 

[MustangGal]

I've learned to keep my "outside the box" choices to myself at times, just so I don't have to listen to someone tell my all the reasons my decision is bad/wrong. Just do the same open ended response, Oh we're not sure where we want to live yet, maybe in a few years, etc. My sister is in the same boat, she has no interest in owning a home and is happy renting, and my family has been giving her grief about it

 

[Guilty Pleasure]

"When are you buying a house?"

"We're not. We love where we live now and like the flexibility of renting. Maybe some day, but we're not thinking about it any time soon. We want to enjoy our marriage ceremony and our time as newlyweds before we make any more major decisions."


short and sweet, polite, closed topic. If they try to continue talking about it, and you don't want to, just laugh and say "seriously, can't think about that right now! so excited about the wedding!" or whatever. While it's none of their business, I assume that the people asking are friends and family who care about you and are just making conversation. If some rude, nosy busybody butts in or starts telling you what you should do, be brisk or rude as you see fit.

 

[Steel]

Best wishes for the upcoming big day.

You know that people don't really care about half, if not more, of the crap they ask. Most is just 'polite' conversation.
If you are single; the question is when you are going to settle down.
If you are in a relationship; it is when you will get engaged.
Engaged; when the big day is.
Married; when the babies/house/bigger house/baby #2/ baby#3 are coming.

Most people will know the basic facts about you and those facts lead to an acceptable norm of conversational questioning. It is not personal - the questions are not meant to pry just to make small talk.

So if it is a sore point for you just reply - I'm gonna buy as soon as the perfect 5000sqft beach house on an acre private plot comes up for sale under 50k! (insert big smile and laughter)

In saying all that, I think that getting on the property ladder never gets easier. Unless you get lucky enough that you or your FI get a huge bump up on the $$$ and skip a level. It will probably be as much a % of your income now as it will be in 10 years time. Especially when you weigh in that the house you wanna buy in ten years will be more expensive than the one you would buy today. IMHO, get on as soon as it is viable.

 

[honey22]

Holy Moly Danielle!!! Where abouts in Oz do you live? Granted, we don't live near the beach, but our mortgage is around $500 per week.

I guess it's totally up to you though, if you love the lifestyle that you have now, then I don't see what's wrong with renting.

I think people are probably coming from the same place as my thinking, I could not spend that amount of cash per week to pay someone elses mortgage off, I would rather pay my own off. I think people mean well, but it's not usual that you find a couple who are happily renting with no plans to buy a house. They probably just don't 'get' your lifestyle. That's ok.

 

[Dannielle]

Holy Moly Danielle!!! Where abouts in Oz do you live? Granted, we don't live near the beach, but our mortgage is around $500 per week.

I guess it's totally up to you though, if you love the lifestyle that you have now, then I don't see what's wrong with renting.

I think people are probably coming from the same place as my thinking, I could not spend that amount of cash per week to pay someone elses mortgage off, I would rather pay my own off. I think people mean well, but it's not usual that you find a couple who are happily renting with no plans to buy a house. They probably just don't 'get' your lifestyle. That's ok.

We live in the Sutherland Shire in Sydney. A 2 bedroom unit like ours is roughly $450,000, a 4 bedroom house is upwards of $800,000 to over a million. Its a lot of debt to get in to (especially at 21!)

 

[geckodani]

My husband and I are going through the same dilema, and have pretty much decided to rent until we find a house that fits us juuuust right. Don't let other people's nosiness bug you. I too get so annoyed when people assume that their choices are right for you.

 

[Pandora II]

I don't see anything wrong in making that choice. I think the main reasons people want to own rather than rent are:

1) Security - you're not at the mercy of a landlord who might suddenly decide to sell up/evict you. Not so bad when you are just a couple, but with a family it could mean a forced move that has consequences for children's schooling, friends etc if you can't find something in your budget in the same area. Ownership doesn't guarantee that you might not have the same problems if something tragic was to happen, but life insurance and mortgage protection insurance can go a long way towards mitigating this. The state of the market also affects renters - especially if the rent is close to the landlord's mortgage payment as a small change in interest rates can mean that they are forced to sell or increase their rents.

2) Having somewhere you can make your own. I love being able to do up my house - DH and I are big on interior design and aren't the 'neutral colour scheme throughout' types, renting would mean that we wouldn't be able to have that kind of fun.

3) Potential investment - Ideally you will always sell for more than you bought allowing you to move up the housing ladder. Once you no longer have a family you can potentially downsize which could give you a very nice chunk of $$ to put into a pension scheme or just boost quality of life.

Obviously the market and your location can make big differences to this, but on the whole buying a long-term 'home' is generally a good investment, short term gambles or owing property portfolios are much riskier.

4) Ability to move up the housing ladder - a few personal examples:

a)my sister and her husband made very savvy purchases with their last 3 houses, a lot was due to luck as they always seemed to buy when the market dipped and sell at the high point but they always bought in up and coming locations and houses that needed a bit of work. They now have a large 4 bedroom house in a lovely area with a very small mortgage as they made so much profit from the last sale. They would be paying far more in rent than their mortgage and they could NEVER have afforded a house like theirs purely from their income.

They're planning on moving to Australia for a 3 year work contract in the Spring, they will rent their UK house out which will both cover the mortgage and build their savings and will mean they have a home to return to in 3 years without having to worry about the vagaries of the housing market.

b) DH and I used our first home to raise the capital for our second - even though we released a fair amount of equity to pay the downpayment on this one, we are still renting it out for 6 times the mortgage payment which means that I can afford to stay at home with the baby as the rental profit pays a lot of our current home's mortgage.

c) My BIL has finally bought a property at the age of 37 after renting all his life. Although he earns more than DH and I combined he had to save for several years to afford the downpayment as he was going straight into the market for a family home rather than gradually going up from smaller properties. His mortgage is about the same as his rent, but if you add up all the rent he has paid over the last 17 years he would have almost paid off the mortgage by now.

One of his reasons for renting was that he always wanted to live in a property with kerb-appeal. DH and I lived in a number of not very attractive properties which BIL wouldn't have been able to bring himself to live in. He was prepared to spend the money on rent to live in expensive properties in expensive areas whereas DH and I reckoned that we would be able to upgrade over time.

5) Feeling that you are 'throwing money away'. Every mortgage payment means a little more of your property is yours. Eventually it's all yours and you have no more payments. Once you're retired and not pulling in a salary it's nice to know that your house costs are zero. If you have always rented then you will still have to come up with the rent money every month.

6) Not wanting to give $$$ to the landlord. Not sure our tenants would be thrilled to know how much profit we make on our rental property even though we only charge the market rent and the flat is easily the nicest in the area.

7) Status - owning a house in a sought-after location is status symbol to many people. Many men see it as a solid representation of their ability to provide for a family and of their financial success.

Home ownership is promoted as the ideal in the UK as well.

These are the reasons I can think of why people are so keen to invest in bricks and mortar. I will say that the criticisms can work both ways... everytime any of us bought a house, an email would arrive from BIL with predictions of gloom and despair and the likelihood of us all being bankrupted by interest rates and housing price crashes which got rather tedious.

 

[kama_s]

I disagree with some of the comments posted here. Buying is not always the best choice, so I commend you on waiting. We are as well, and here is our reasoning.

1- Most people forget that you are essentially paying off interest the first 10 years of your mortgage!! Personally, a wiser decision would be renting and saving to put as much down as you can when you do finally buy. Then, instead of having a 500k mortage, you might only have a 250k mortage, slashing interest by half.

2- Investment wise, a house only gives back 2%, after all taxes etc. Investing same elsewhere can bring you in 5-9%, depending on what your portfolio consists of.

We get the same question a lot as well, and I just respond with 'when the time is right' and firmly end the conversation there. It's none of anyone's business!

 

[soocool]

If you are able to pay so little for renting and are able to save that is great. Owning a home is a huge committment and can be considered a money pit. I have friends who are childless and have been renting for over 30 years for little money. They just bought some land on a lake and are building a log home there where they will live out the rest of their lives. (Paying cash and no mortgage will save them a ton of money. Invested their money when times were good and reaped the benefits!)

We were able to build over 15 years ago when prices here were very low. Soon afterwards there was a building boom and our property value soared. Even with the current market if we were to sell we would do very well. DH and I own land in a few places and will build our smaller (downsized) home in one of the areas once he retires in about 9 years.

 

[MichelleCarmen]

We're doing the same: renting for less than 1/2 what our mortgage payment would be and I'm very happy with that. DH wants to buy again, but I just do not want the hassle of having the high payment AND all the issues (like new roofs/windows, etc.) and right now I feel happier putting $ into savings. Everyone I know has lost so much equity. . .basically their down payments and that wouldn't be a fun position to be in. . .

Someday we'll buy again. . .maybe.

 

[honey22]

Holy Moly Danielle!!! Where abouts in Oz do you live? Granted, we don't live near the beach, but our mortgage is around $500 per week.

I guess it's totally up to you though, if you love the lifestyle that you have now, then I don't see what's wrong with renting.

I think people are probably coming from the same place as my thinking, I could not spend that amount of cash per week to pay someone elses mortgage off, I would rather pay my own off. I think people mean well, but it's not usual that you find a couple who are happily renting with no plans to buy a house. They probably just don't 'get' your lifestyle. That's ok.

We live in the Sutherland Shire in Sydney. A 2 bedroom unit like ours is roughly $450,000, a 4 bedroom house is upwards of $800,000 to over a million. Its a lot of debt to get in to (especially at 21!)

Yikes! I see your point. I didn't realise that you are only 21 - more of a reason to just chill out, enjoy your beachside apartment and save up the extra money for a bigger deposit if you decide one day that you would like to buy. You are still young and you have plenty of time to buy a house. Yes, people do suggest to get into the market as early as possible, but like you say, you are saving lots, so it's not like you are throwing your money away on rubbish. If you are continuing to save for your future, then good for you!!! I wish I had a better saving habit at 21, that's for sure!

 

[noelwr]

where I live (Holland) it is actually cheaper to buy than to rent due to tax benefits so I can understand why the question would come up here, but not in OZ if renting is cheaper. how strange that after you explain it to people, they still don't get it.

I don't think you need any advice on how to explain your choice because it sounds quite clear to me.

anyway, you can always answer with: "We're waiting to win the lottery."