Quote:
Originally Posted by Toy Soldier
It's not really technically true that a mortgaged house belongs to the bank and not the buyer, to be fair... A mortgage is simply a loan that is leveraged against the property as a guarantee that the money will be repaid. So long as you keep within the terms of the loan, the property does for all intents and purposes belong to you. For example... If you buy a run down flat for 25k on a small mortgage, do extensive work on the flat that doubles the value, you still only owe the original amount of your mortgage... The bank only owns the debt, not the property (which is now worth £50k).
Worked out pretty "well" for my parents in that sense, they bought a house (4 large bedroom, detached) for £69k in 1997... And got divorced at what turned out to be a very good point to do so - 2005, after the property value had soared in 8 years to nearly £125k but before the bubble burst. They had a nice chunk left each after the mortgage was paid back. Which they both blew through in like a year, but that's another story  . |
Your property is your asset that ensures you can re-pay your loan. During the last recession, many people defaulted on their mortgage payments and many lost their homes back to the lender.
Yes, you only owe the amount agreed but if the bank forecloses on you, they still re-possess the house, re-sell it and give you the residue not owed to them. They can't only take a portion of the structural asset, unless, its been divided into apartments, in which case they could take one apartment.
We had quite a nice house in Surrey but we reached a stage where everything revolved around working hard and paying the endless bills. The decision to give that up was the best thing we ever did. We still work hard but we now have enough free cash to play hard too. Life's too short!