any benefit to having a mortgage compared to renting?!

[general interest!]

Hello

 

I work in a low-paid industry, where promotion ladder is also almost invisible. I don't have a mortgage as unfortunately with this scenario, haven't been able to afford one.

 

I am in london and waiting list for council housing is massive, it would take years to get to the top and so it's hard to see that happening (also, what if I move borough...I will go to the bottom again).

 

So I'm looking forward in time and it looks like I will be on either state pension or maybe I'll have managed to scrimp and save to be able to have that plus a few k from my pension contributions.

 

I don't know the way things work for pensioners. If my situation stays like this...would i get housing benefit/housing allowance, once retired, to enable me to afford a place to live? Does pension get treated as income by the housing benefit people?

 

*

 

I'm also wondering, for people like me basically on a low income (it having become apparent that as things stand I am stuck in this industry I'm in and the seriousness of this having hit home even more as i have got older and prospects for home ownership have seemed to get more remote)...is there any advantage to actually owning your own place (ie having a mortgage)?

 

if my position changes somehow and i was able to scrape together enough to get a mortgage...my position would then be one of paying that off over 25 years, so ok, it's mine at the end of that time (retirement age!) but it seems like I'd be about equally as well off if I didn't do things this way, because if things don't quite improve to the point where I'm able to buy somewhere, then I'll be eligible for housing benefit to help me live (and, importantly, in retirement). So, killing myself to get a mortgage and pay that off over 25 years, seems to have little if any benefit compared to not getting a mortgage, as far as I can see?

 

the one benefit I can see of having the mortgage is that after all that time, since I own my owned my own place then I would be able to buy a different kind of place (ie somewhere else) in retirement. But then, since we are talking about 'low quality'-type housing (like, cheap cheap cheap), this doesn't seem much of an advantage if any, because if you were on housing benefit in your retirement, you would also be able to move. So ok, I revise that point, it is not much advantage, owning somewhere, from that point of view.

 

Ok, the one advantage to owning somewhere is that money can be extracted from the place if needed to go to something else? Like, medical treatment costs (but again, you could get these on the state)...I suppose then the one advantage of owning the cheap cheap place rather than renting and getting housing benefit is if you die, your offspring (I don't have any...) could inherit it...

 

am I missing something?

 

it seems like if you're generally on a low income of a kind that would make you entitled to get housing benefit (which in london can still be quite a 'high' income - eg 24k!), in your working life, there's v. little advantage if any to scrimping and saving to try and convert your situation in to one where you've got enough deposit and can convince the bank to give you a mortgage...it doesn't leave you any better off in your working life since you've got the stress of a mortgage and when you're retired, the one advantage (since you'd get housing benefit if you didn't have it) is if you die you can leave the flat to someone else (if you've got any dependents).

 

Really really really grateful for any responses! I'm stumped!

 

Thanks in advance

 

Reggie

[Guest janensteve]

i suppose once you own your own home, you will need less pension to pay your rent if you were renting.

[general interest!]

re: your reply...thanks for that but I think this is incorrect, or at least, it is unfortunately 'missing my point' as it were. Because, if you are only on a low pension - which I like many millions of others will be - your pension income is only going to be let's say £130/week (if your pension is 8k a year) or around £100/week if you are just on the state pension. All pension counts as taxable income. But according to entitledto.co.uk, income at these low levels means your housing benefit would hardly be affected - if you were only on £100/wk (state pension, roughly!) you would get all your housing paid for (ie, housing benefit would pay the whole cost), and if you were only £130/wk you would get, like, 90% or more of housing cost paid. SO...if you don't own anywhere and have a low pension, it seems you are just as well off as someone who owns their own place (having paid off the mortgage), the only real benefit of owning it being that you could leave it to your children. this is the problem so...why

struggle with a mortgage then?

 

The govt doesn't want people to work things like this out...

 

Unless i am missing some 'benefits' of being a mortgage-payer/owner when your income is low. Seems you need to be more middle class for it to pay any benefits really, being an owner.

[Jan4a]

Hi

 

I owned my own place but sold it 2 years ago and went into rented.

 

My reasoning was similar to yours in that I have no children so didn't see the point. I don't have life insurance for the same reason.

 

Also my younger brother died which sort of stopped me assuming I'd still be alive at retirement age. I'd rather have the money now, tomorrow might be too late sort of attitude. A very personal reason that won't make sense to everyone!

 

And it was a huge relief - its much less stressful renting. Not so much paying the mortgage, as worrying about repairs etc. When you're renting you just ring the landlord! Also, I don't have any debt at moment but if I ever do I won't be worrying that they can take my home away.

 

I sold my house for reasons given above. However, 12 months after I sold it I was made redundant. I know DWP pay something towards mortgages but they don't pay anything towards repairs etc. so it made my redundancy a lot less stressful. I wasn't worrying about my home as housing benefit will pay it if I don't get work for a while.

 

My parents are now pensioners. They did get benefits for DLA and carer plus housing and council tax benefit.

 

However when my dad got his pension lump sum in January, it upped his savings so he no longer gets housing or council tax benefit which I suppose is fair enough. When he has spent his savings on general living costs, then he will be able to claim housing benefits again.

 

So, at the moment I agree with renting. That could change if recession ends though.

[loopinlouie]

I felt a great sence of relief also years ago when my flat was reposessed. I thought I would feel sad, but that flat had been trapping me with a

violent partner. I am sure to many there is a sence of sattisfaction as there once was with me, but its the sence of the unknown and something big has to happen to change the minds of those who own their properties to feel a relief to now rent. People losing their homes used to feel a sence of shame and failure as many looked at debt with dusgust, but now its just a fact of life.

 

Unless I win the lottery of course and I will happily buy a 'little' mansion

 

The biggy is the relief that renting means you ring the landlord,last year my disabled shower starting leaking and the frontroom ceiling fell down, I couldnt have coped if it was my property, the landlord were longwinded but to be fair took over and repaired it.