With renting comes the risk of regular price rises at the whims of your landlord, the prospect of being turfed out of your home, and problems that often go unfixed for months on end – things I’ve experienced first-hand in the past decade as a tenant.
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There are a multitude of advantages to being an owner-occupier: the security, the fact that you are slowly accumulating ownership of an asset, and – with most mortgages – the peace of mind that your monthly payments will stay the same for a set period of time greater than a year.
For people in this situation, such as myself, there is a growing range of mortgage products which lenders claim can help.
But the boundaries are being continually pushed. More and more lenders are offering longer mortgage terms of 40 years – which reduce payments in the short-term, but increase the interest you pay overall – and some institutions are lending well above the traditional loan-to-income (LTI) ratios.
In some cases, this could even mean buyers paying more than half of their income towards a mortgage.
I simply can’t be persuaded that pulling out all the stops and stretching myself to my financial limits with the single-minded goal of getting on the property ladder is worth it.
Taking on borrowing that takes up a huge portion of your income is extremely difficult to manage at the best of times, but if things go wrong – let’s say you lose your job or have to take on extra financial responsibility – then you are left up shit creek without a paddle.
Also, if you’re on the edge of being able to afford your mortgage, then the security of tenure – a huge advantage of home ownership – does not exist, and is displaced with a turbo charged anxiety about whether you will be able to meet your payments in the future.
The upsides of owning an asset via a long and expensive mortgage also seem seriously reduced to me.
Although many may intend to shorten their term once they have pay rises and enough money to overpay, this is not guaranteed, and creates an extra pressure for you to climb in your career at break-neck speed.
You’d possibly get a better return from investing in equities or even a top-performing cash account.
But in some ways I’m in partial agreement. Owning your home is invariably better then renting, but doing so at the sacrifice of everything else is simply not worth it.
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