I’ve just come back from doing BBC Breakfast where I talked about mortgages following the CAB’s report that many are struggling to meet their repayments (watch the BBC’s Real Player video of it). I can’t applaud Citizens Advice enough. As I’ve discussed here before (eg in my blog House Prices Could Fall) I’m fearful we’re pushing ourselves further into trouble, with people overextending themselves on their home loans (if that’s you, do read the Remortgage Guide which could at least cut your costs).
My view is much of the problem has been caused by TV property porn shows. Many of the property gurus, often, understandably, work in the property industry themselves, and of course therefore are quite happy to see continued price rises. There’s so much of this on our TV screens that we’ve been hypnotised into certain beliefs about property ownership. Let me set out some of what I believe are the misconceptions:
We’ve been hypnotised to believe…
1. Property ownership is a right
If you don’t own a home, you’re seen as the underclass and renting is pooh-poohed as a dirty word. Of course in the long term home ownership is a good goal, yet this is confused with “I must immediately get on the housing ladder or I’m a loser.???
Yet by leaping into home ownership many people risk borrowing much more than they can afford, overstretching themselves and getting into financial ruin. A home is just another asset – admittedly an important one that provides us with security; yet a mortgaged home isn’t yet ours – fail to repay and the mortgage company can sell it from under you.
I’ve spoken in the past (mortgage or remortgage guides)
Admittedly there is slightly less worry if you have a fixed rate mortgage as you’ve a couple of years’ or more protection in the event that rates rise, but on the back end you will still be at the mercy of the market.
If I have, well perhaps that’s a good thing. My aim isn’t to make predictions, just to try and undo some of the false assumptions we’ve been fed. House prices could continue their relentless march upwards, and then many will profit.
Yet equally things can go wrong. Plan for the worst and hope for the best.
