Who said it makes you rich ? Definitely not.

A mortgage is a huge debt tied around your neck for life. Gone were days when it was a good investment , not today however.

For those who visited the UK or the USA 20 years ago give or take 5 years either way, peharps mortgages had good interests rates and low deposits, so many people of those times have already paid for their houses in full. Some made profits by selling.

But today its a different matter, if you buy a house worth £200,000 over 25 years , you pay interest of £224,000 @ 7% bringing the total to £424,000. Monthly payment is £1,550 and after 15 years you have only just finished paying off the interest.

But really how many people earn a take home of £1,550 and even if they earn lets say £2000 take home, almost all of it goes on mortgage.

Definitely does not make you rich by any standards.

frosbel:

Who said it makes you rich ? Definitely not.

A mortgage is a huge debt tied around your neck for life. Gone were days when it was a good investment , not today however.

For those who visited the UK or the USA 20 years ago give or take 5 years either way, peharps mortgages had good interests rates and low deposits, so many people of those times have already paid for their houses in full. Some made profits by selling.

[b]But today its a different matter, if you buy a house worth £200,000 over 25 years , you pay interest of £224,000 @ 7% bringing the total to £424,000. [/b]Monthly payment is £1,550 and after 15 years you have only just finished paying off the interest.

But really how many people earn a take home of £1,550 and even if they earn lets say £2000 take home, almost all of it goes on mortgage.

Definitely does not make you rich by any standards.

While the calculation is correct, your home is UNLIKELY to be worth only £200,000 after 25 years. It will likely have appreciated quite a bit, if not doubled a number of times. What CAN make you rich is if your house appreciates in value in excess of the interest rate you are paying on the loan. If you are paying 3% interest and your house value is rising by 5% then you are gaining in the long run.

The key thing is to pay off the mortgage as soon as possible. In the example you gave, paying £1830 per month for a 15 year mortgage reduces the total amount you pay to £329,000 - a reduction of £100,000.

Buying a home doesn't make you rich, but it does show more than an average income level for you to be able to afford paying that kind of monthly outlay.

Frankly in many cases it pays to rent than to pay for a mortgage which you might end up defaulting on.

debosky:

While the calculation is correct, your home is UNLIKELY to be worth only £200,000 after 25 years. It will likely have appreciated quite a bit, if not doubled a number of times.

Buying a home doesn't make you rich, but it does show more than an average income level for you to be able to afford paying that kind of monthly outlay.

Only a fews ago when houses rapidly appreciated in value was this possible, today is a different matter.

I know people who have been trying to sell for years at reasonable profit margins, all to no avail.

Like I said there was a time when you could buy a house for 100,000 and sell for 160,000 netting almost 60,000 taxable profit.

Alas those days are long gone.

There are people on £40 - 60,000 who cannot afford houses, believe me, when you have to come up with a 25% deposit excluding legal, surveyor and stamp duty fees.

But it could well improve in a few years to come when the biting recession is resolved one way or the other.

frosbel:

Only a fews ago when houses rapidly appreciated in value was this possible, today is a different matter.

I know people who have been trying to sell for years at reasonable profit margins, all to no avail.

Like I said there was a time when you could buy a house for 100,000 and sell for 160,000 netting almost 60,000 taxable profit.

Alas those days are long gone.

There are people on £40 - 60,000 who cannot afford houses, believe me, when you have to come up with a 25% deposit excluding legal, surveyor and stamp duty fees.

But it could well improve in a few years to come when the biting recession is resolved one way or the other.

We shall see - it is tough right now, but it doesn't mean things won't improve. The key thing is to be in it for the long run, not seeking to make short term profit.

Afterall, if you buy the home to LIVE in, not as an investment as such, then you'll be less concerned about how the value is moving upwards or downwards.

when i think of mortgages - i remeber the past US real estate boom and the fallout - people stuck paying off $ 500,000 mortgages on houses worth $100,000


talk about getting shafted by the system

7% interest rate? ouch!

One would certainly need to hold the property longer these days and hope for a better tomorrow in terms of making a profit, it's a long term investment for the most part as the days of "flipping" houses are way over now that some senses seem to have gone back into banking and finance.

debosky:

We shall see - it is tough right now, but it doesn't mean things won't improve. The key thing is to be in it for the long run, not seeking to make short term profit.

Afterall, if you buy the home to LIVE in, not as an investment as such, then you'll be less concerned about how the value is moving upwards or downwards.

Sure , but lets say you want to move due to a new Job, better schools or even reloacting back to Naija it could become a problem trying to sell off the house.

Except peharps you rent out , but many people make no profit in renting these days, some have to shore up the deficit in mortgage payments.


Like you said though this is a phase and things will improve in the near future.

I was only referring to the present.

Thanks.

please take this to the properties section.

Do you really 'own' the house when their is a mortgage lien on it?

there is one very important point that one has to remember:
if you dont buy then paying rent for all these yrs is definitely WORSE. . . . . . . . just like throwing money in the sea!

so although having a mortgage can be risky and painful for some, it is ten times better than paying SOMEONE ELSE'S mortgage through renting.

and if you ever move, relocate or find something better then just rent out your property and let someone else pay your mortgage while you get something better (provided you get the right finances to get a second mortgage)

by the way, owing a house any where in the world doesnt make you rich, it just makes you a house owner.

Awon ara ilu mi or my fellow Nigerians go to a UK Mortgage Broker like myself and "inflate" or "falsify" or increase their salary.

Pls how can an administrator earning £12,000 per annum afford a £200,000 property.

You should go for a £48,000 flat.

But, because they want to show off and be like the Jones or be what they are not. They buy this property.

What happens is that, they do double jobs to keep up the repayments of this heavy mortgage, which can be £1500 per month.

I am the first to raise my hand that, I was in that category but, I read biz books and I will never make that mistake again.

If u are in this position, sell the big house and downsize to a cheaper and affordable house.

To all my fellow Nigerians who cannot afford their rent and living in places like, "Crown Estate", Ikoyi, VGC and you are keeping up appearances, MOVE to a cheaper area. Your children will be happy to see more of u in the house. Rather than, live in a big house and they don't see mummy and daddy because they work long hours.

Another important info about UK is the financial cycle.

The financial cycle of the UK.

Properties go and down in the UK.

If you study the market, you will realise there is a downturn or recession, every 7 to 10 years in the UK.

Pls research this.

For example, the recession started before 2007 but, we started "feeling it"
around Nov 2007, when banks started reducing money are borrowing.

The smart people bought properties around year 2000 and SOLD around around Dec 2006.

Around Dec 2006 the properties have peaked and reached a "new high figure". This is a sign for the smart investor to SELL SELL SELL.

They could not afford to be greedy and hold on to a property. This is because, they will find it hard to sell since, no one is buying and everyone is selling due to, job losses, etc.

I can tell u that, the smart investor who buys during recession at a bargain price. Who sells at a high price during the "bull market" as d Stock investor calls it, will tell u otherwise.

Ask most millionaires and billionaires, how they made their money, it is real estate or ground or ile.

Yes, Bill Gates made his money through software.

Now, you can decide whether owning a house in the UK will not make you rich.

We need financial education.

biina:

Do you really 'own' the house when their is a mortgage lien on it? 

YES, YES and YES

We can't all be Nigerian political or Bank thieves buying up properties in the UK and USA and paying cash for it, at least we can walk with our heads help up high knowing we've never stolen from the people or a "Public trust",  A buddy of mine leave in the same area madam Oceanic bought up a whole cul de sac, will it surprise anyone if these seized properties end up being sold to the same people who are investigating her or their cronies?

"A lean freedom is better than a fat slavery, " remember the guy who made that statement? Get real dude!

PS: If I lived a few miles from Atiku's house, what difference does it make for me knowing that he paid cash and I have a mortgage? Think about that for a minute if you have the capacity to

It will last for a very long time, but just like in the UK, nothing last forever.

nice to know the fact.

@aasog and ode remo,

I agree with both of u. Owning a house will make u rich in 9ja for a very long time.

It is better to own a property in Naija first before the UK.

Why?

Because real estate or properties in Naija only go, one way and that is, up or appreciates.

But, I read in last wk Castle magazine that, property prices are falling in Magodo, Ikeja.

Compared to the UK, which goes up and down.

If you are currently in diaspora, pls come and invest in Lagos, in particular.

Regards

@Chaircover,

True talk.

Smart investors buy now.