In 2005 my husband and I decided it was time to get onto the property ladder. We had been renting for a year and kept hearing that we were mad to be paying rent when we could be paying a mortgage and have something to show for all those monthly payments. We didn't really think about the commitment involved in taking out a mortgage and didn't even think of it as a loan as that's just what you do when you get a job and become an adult, right?
The property market was booming, house prices were through the roof and demand was fierce. We consulted a mortgage adviser and were thrilled to find out just how much we could borrow and that we didn't even need a deposit. We felt excited to be embarking on the hunt for a new home, but that excitement quickly turned to desperation when the offers we were submitting were continuously being trumped by other eager buyers.
After seeing half a dozen houses disappear from our grip we decided to attend an open viewing for a house that was basically a shell. Caught up in the property buying fever, we to put our highest possible offer in for that wreck of a house and thought we'd simply refurbish it ourselves. Several other buyers submitted offers, which would never happen in today's market, but ours was the winning offer and we were relieved to be homeowners at last.
Our rent was £350 a month and our new mortgage payment was almost double that. As young professionals, our attitude was simply that our incomes would only increase as we moved up the corporate ladder and we got to work carrying out the refurbishment. There was a lot more work involved than we realised and we quickly discovered that we don't enjoy tiling, painting, laying flooring, or any such tasks.
We hated that house. We hated that it was draining our bank accounts, time and energy and we quickly realised that the neighbourhood left a lot to be desired, so we decided to sell.
We sold the house quickly as the market was still booming and moved on feeling deflated, but relieved to be free. We both regret buying that house as we just weren't ready for the financial commitment involved. We regret jumping into the social norm and loading ourselves up with debt at such a young age, but we learned a lot from the experience.
We decided to learn more about personal finance and now spend much longer talking and thinking over financial decisions. Our mortgage of £85,000 would have attracted £93,988 in interest over the 25-year repayment period, making the total repayment £178,988.
We decided to rent a cheap flat and save to pay cash for our next home. This saves us being in debt, lining the pockets of unscrupulous lenders, being under pressure to meet that financial obligation or lose our home, and still works out cheaper for us than paying the interest on a mortgage loan.
We are glad to have escaped such a financially risky situation and are now enjoying the freedom of renting while growing and discovering more about what we really want as opposed to what we should want.