Mortgage free living - Discuss
Aug 6th 2008, 1:53 pm
#77
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Re: Mortgage free living - Discuss
Its not a risk free strategy, but he knows how to shelter his personal assets.
Oct 7th 2008, 3:22 pm
#79
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Re: Mortgage free living - Discuss
No offence taken, although I think you're insane if you think you know more about what is good for us than we do after careful consideration!!
Firstly, I don't think it will lose anywhere near that amount of money. Houses are still selling quickly where we are and for good money, some in our village have recently gone for over the asking price after getting into a bidding war. I also think that next summer will be the low for the housing market in the UK (and I work in property, relocation agent) and that's when prices will bottom out, so we'll only have a few months of potentially losing money on it anyway.
And secondly, you're not taking into account rental money in your figures - we'll rent it for approx £3k pcm so over a 2 year period that's £72k. Our mortgage is only £1200 a month, so we'll be making approx £1800 a month on renting it. Even taking off things like tax on that income (although hopefully wouldn't be much as we'll do it my name and I won't be earning, and after offsetting everything possible etc), that should still more than balance out any downturn in value.
I have taken advice on it from the best financial advisor I know - my father!! He's an absolute whizz at financial matters (has just been offered the job of managing the budget for the London Olympics to show you how highly he is thought of in London financial circles - he did turn it down though!!) and earns £400k a year, as a consultant, for his financial opinion. He predicted the last stock market downturn and took over £1M of stocks and shares and converted them to cash. Etc, etc. Basically, he's a financial genius and we've discussed it all with him. He agrees we are doing the right thing.
And finally, I have to say that another big reason for us choosing to keep the house is that we have no intention of staying in Canada forever, and simply want to be able to come back to the same house, in the same village, which we love. Houses here don't come up for sale very often so we may not be able to move back here if we don't already own one, and I don't want to take that chance. And for our childrens sake, we want to move back somewhere familiar. That will be something we can't put a value on.
Hope the above reasons have clarified things for you and you no long think I'm 'insane'.
Firstly, I don't think it will lose anywhere near that amount of money. Houses are still selling quickly where we are and for good money, some in our village have recently gone for over the asking price after getting into a bidding war. I also think that next summer will be the low for the housing market in the UK (and I work in property, relocation agent) and that's when prices will bottom out, so we'll only have a few months of potentially losing money on it anyway.
And secondly, you're not taking into account rental money in your figures - we'll rent it for approx £3k pcm so over a 2 year period that's £72k. Our mortgage is only £1200 a month, so we'll be making approx £1800 a month on renting it. Even taking off things like tax on that income (although hopefully wouldn't be much as we'll do it my name and I won't be earning, and after offsetting everything possible etc), that should still more than balance out any downturn in value.
I have taken advice on it from the best financial advisor I know - my father!! He's an absolute whizz at financial matters (has just been offered the job of managing the budget for the London Olympics to show you how highly he is thought of in London financial circles - he did turn it down though!!) and earns £400k a year, as a consultant, for his financial opinion. He predicted the last stock market downturn and took over £1M of stocks and shares and converted them to cash. Etc, etc. Basically, he's a financial genius and we've discussed it all with him. He agrees we are doing the right thing.
And finally, I have to say that another big reason for us choosing to keep the house is that we have no intention of staying in Canada forever, and simply want to be able to come back to the same house, in the same village, which we love. Houses here don't come up for sale very often so we may not be able to move back here if we don't already own one, and I don't want to take that chance. And for our childrens sake, we want to move back somewhere familiar. That will be something we can't put a value on.
Hope the above reasons have clarified things for you and you no long think I'm 'insane'.
Oct 7th 2008, 3:46 pm
#81
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Oct 7th 2008, 5:17 pm
#82
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Joined: Jan 2005
Posts: 150
Re: Mortgage free living - Discuss
I,m adding my comments to this post after a big gap.. 
)
Both me and wife are working hard to pay off the mortgage in 2-3 years, we intend to start investing in commercial properties soon after paying off the mortgage. (Could even be an apartment to be rented or industrial).
From one side, it makes the roof on top of my head less risky, would be pressed to pay more or less same mortgage as of now ( I feel such pressure is necessary before I switch to more relaxed lifestyle and make me too lazy, I wouldn't enjoy that honestly), would be able to write off all the mortgage interest paid on the commercial property (this should pay some money back to enjoy a better lifestyle) and then again if the ship (commercial investment) sinks, I wouldn't be pressed to restart from the beginning instead a quick recovery.
Having equity (house) and job for at least either one of us at any point would make us feel more comfortable than living a life with mortgage and then I am not a firm believer of complex economical strategies (as implemented by the coveted wall street folks) but trust in "No debt" or debt with collateral that will not bite the family.
)Both me and wife are working hard to pay off the mortgage in 2-3 years, we intend to start investing in commercial properties soon after paying off the mortgage. (Could even be an apartment to be rented or industrial).
From one side, it makes the roof on top of my head less risky, would be pressed to pay more or less same mortgage as of now ( I feel such pressure is necessary before I switch to more relaxed lifestyle and make me too lazy, I wouldn't enjoy that honestly), would be able to write off all the mortgage interest paid on the commercial property (this should pay some money back to enjoy a better lifestyle) and then again if the ship (commercial investment) sinks, I wouldn't be pressed to restart from the beginning instead a quick recovery.
Having equity (house) and job for at least either one of us at any point would make us feel more comfortable than living a life with mortgage and then I am not a firm believer of complex economical strategies (as implemented by the coveted wall street folks) but trust in "No debt" or debt with collateral that will not bite the family.
Will start looking at suggestions in this thread.
Oct 7th 2008, 10:28 pm
#84
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Posts: 436
Re: Mortgage free living - Discuss
I will confess to not having waded through all the previous posts, but here is my take.
Its too easy to look at this from a UK perspective, where most peoples mortgage are a lot higher and more of a burden than here in Canada due to average property prices being a lot more expensive relative to wages.
My net income (and expenses
) for a family of 4 is about $4k a month (fairly middle of the pack in Canadian terms), and only $600 of that is mortgage payment anyway because property costs in my bit of Ontario are relatively low still
Now $600 is not to be trivialised, but its also not the difference between "getting by" and "a life of ease", I work full time in a reasonably well paid job. Saving that $600 on the mortgage is not going to be enough to work part time, because all those other costs will still be there
$300 Heating oil
$120 Hydro
$300 Car House and Life Insurance
$200 Property Tax
$800 Groceries
$150 Gasoline
$100 Phone and TV
That's $2k before all the other miscellaneous stuff that ends up on the MasterCard every month, and the need to plan to save for retirement at least, and if you have kids for further education costs. And its not taking into account that you will have occasional major lump sum expenses..New roof $5-10k every 15-20 years, New Car as the old one rusted away every 10-15 years, etc etc.
So most people are going to need at least $40k a year gross income, and probably nearer $50k, even without a mortgage.
Its too easy to look at this from a UK perspective, where most peoples mortgage are a lot higher and more of a burden than here in Canada due to average property prices being a lot more expensive relative to wages.
My net income (and expenses
) for a family of 4 is about $4k a month (fairly middle of the pack in Canadian terms), and only $600 of that is mortgage payment anyway because property costs in my bit of Ontario are relatively low stillNow $600 is not to be trivialised, but its also not the difference between "getting by" and "a life of ease", I work full time in a reasonably well paid job. Saving that $600 on the mortgage is not going to be enough to work part time, because all those other costs will still be there
$300 Heating oil
$120 Hydro
$300 Car House and Life Insurance
$200 Property Tax
$800 Groceries
$150 Gasoline
$100 Phone and TV
That's $2k before all the other miscellaneous stuff that ends up on the MasterCard every month, and the need to plan to save for retirement at least, and if you have kids for further education costs. And its not taking into account that you will have occasional major lump sum expenses..New roof $5-10k every 15-20 years, New Car as the old one rusted away every 10-15 years, etc etc.
So most people are going to need at least $40k a year gross income, and probably nearer $50k, even without a mortgage.
I also lived in Ontario until 2005, but back in Kent, England now. Mortgage free is okay if you end up on the same income. As you said other cost in Canada can add a lot on your monthly out goings.
My net pay was $4400/mth
$800 mortgage
$300 Heating oil
$150 Hydro
$250 Car House and Life Insurance
$260 Property Tax
$1000 Groceries
$250 Gasoline
$100 Phone and TV
Total $3110 which left £1290
Moved back to UK and I had to increase mortgage substantially due to house price difference. Net monthly income currently £3300
£700 mortgage
£60 Heating-gas
£35 Electricity
£116 Council tax
£60 car House & Life Insurance
£600 groceries
£40 Phone/TV/broadband
Total £1600 which gives us £1700 left each month.
Note our current house in the UK is 1500 sqft 1970's whereas in Canada our house was 2100 sqft 1900's.
To us we are spending the about same each month but in a smaller house in the UK, but have more spare money for luxuries/kids etc.
hudd
Last edited by hudd; Oct 7th 2008 at 10:32 pm.
Oct 8th 2008, 4:02 pm
#85
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Joined: Apr 2008
Location: Calgary
Posts: 3,340
Re: Mortgage free living - Discuss
The latest Nationwide Building Society house price survey is interesting, in particular the graph on the first page. If the pattern of previous booms and busts is anything to go by it will be years before prices move upwards again.
http://www.nationwide.co.uk/hpi/historical/Sep_2008.pdf
If you can sell up in the UK for a decent price and live mortgage free in Canada, even when the market goes down in Canada (which it probably will but maybe not as badly) you should still be in a better position in 5 years time compared to hanging onto the UK property.
http://www.nationwide.co.uk/hpi/historical/Sep_2008.pdf
If you can sell up in the UK for a decent price and live mortgage free in Canada, even when the market goes down in Canada (which it probably will but maybe not as badly) you should still be in a better position in 5 years time compared to hanging onto the UK property.
Oct 8th 2008, 7:22 pm
#86
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Joined: Nov 2006
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Posts: 2,327
Re: Mortgage free living - Discuss
Iaink
I also lived in Ontario until 2005, but back in Kent, England now. Mortgage free is okay if you end up on the same income. As you said other cost in Canada can add a lot on your monthly out goings.
My net pay was $4400/mth
$800 mortgage
$300 Heating oil
$150 Hydro
$250 Car House and Life Insurance
$260 Property Tax
$1000 Groceries
$250 Gasoline
$100 Phone and TV
Total $3110 which left £1290
Moved back to UK and I had to increase mortgage substantially due to house price difference. Net monthly income currently £3300
£700 mortgage
£60 Heating-gas
£35 Electricity
£116 Council tax
£60 car House & Life Insurance
£600 groceries
£40 Phone/TV/broadband
Total £1600 which gives us £1700 left each month.
Note our current house in the UK is 1500 sqft 1970's whereas in Canada our house was 2100 sqft 1900's.
To us we are spending the about same each month but in a smaller house in the UK, but have more spare money for luxuries/kids etc.
hudd
I also lived in Ontario until 2005, but back in Kent, England now. Mortgage free is okay if you end up on the same income. As you said other cost in Canada can add a lot on your monthly out goings.
My net pay was $4400/mth
$800 mortgage
$300 Heating oil
$150 Hydro
$250 Car House and Life Insurance
$260 Property Tax
$1000 Groceries
$250 Gasoline
$100 Phone and TV
Total $3110 which left £1290
Moved back to UK and I had to increase mortgage substantially due to house price difference. Net monthly income currently £3300
£700 mortgage
£60 Heating-gas
£35 Electricity
£116 Council tax
£60 car House & Life Insurance
£600 groceries
£40 Phone/TV/broadband
Total £1600 which gives us £1700 left each month.
Note our current house in the UK is 1500 sqft 1970's whereas in Canada our house was 2100 sqft 1900's.
To us we are spending the about same each month but in a smaller house in the UK, but have more spare money for luxuries/kids etc.
hudd
Oct 8th 2008, 9:03 pm
#88
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Location: Upstate South Carolina
Posts: 30,768
Oct 8th 2008, 9:26 pm
#90
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Joined: Feb 2006
Posts: 436
Re: Mortgage free living - Discuss
Also in the UK I an a grade lower than job I did 3 years ago in Canada. If you read Steve P recent posts, I also found as an immigrant Brit that you do make less than your Canadian counterpart in 3 jobs I had in Canada. In the CBC report it notes that immigrants make 63% of the salary of similar level of qualification to their Canadian counterparts and I could not understand why.
I worked for the Federal govt in a management role. There appeared to be 3 pay bands for managers. Immigrants $75-90K pa, English Canadians $90-120Kp.a and French Canadians $120-$140k pa doing the same level job? I spent 6.5 year working for the Federal govt and knew this occurred, but was not talked about.
hudd