Key Post Is buying your home the right financial priority?

[Brendan Burgess]

Hi Raven

Sorry, but this is a non-argument.

There is nothing to stop someone renting a house and saving up additional money in a savings account which can be used to buy a house after 20 years.

Taking out a mortgage is simply renting money and not too different from renting a house.

 

[raven]

Hi Raven
There is nothing to stop someone renting a house and saving up additional money in a savings account which can be used to buy a house after 20 years.

I assume the argument here is that the "additional money" is the money saved based on the difference between mortgage interest + home ownership costs and renting/moving costs, and the saving (albeit reinvested) would equate or surpass the purchase price of the house down the road.
I think this argument gets a little theoretical in that it assumes the renter is disciplined to always save throughout the 20/25/30 year period. The forced saving aspect of home ownership works for a lot of people in normal times. Of course the forced saving aspect can be a dangerous inflexibility as well. One thing with home ownership is that it pushes the majority of people to be a bit more financially responsible.

I think the problem with the Rent argument is that once human aspects come into play, I find it hard to believe that your average person will demonstrate the necessary discipline to put the theory into practice.
This is especially the case as other priorities (children, travel, nice car, ..) can all too easily make saving take a back seat for some people.

 

[plendoza]

I think the problem with the Rent argument is that once human aspects come into play, I find it hard to believe that your average person will demonstrate the necessary discipline to put the theory into practice.
This is especially the case as other priorities (children, travel, nice car, ..) can all too easily make saving take a back seat for some people.

These comments are bang on. If you want to go down the investment route you better get youself financially educated and well up to speed. Also a large dose of self-discipline and motitivation is required not to spend your savings.

A big disadvantage against buying a house is location confinement, especially in these times where employment is so variable, and this is the long term direction. We could be employed anywhere from Cork to Cambodia yet.