Belgians are born with a brick in their stomach, alluding on the fact that Belgians want to own a house. We are no different, we do own our house. Is that a good idea?
Why we own a house.
Having our own house – almost paid off, having the cash to do so when we want – brings a lot of piece of mind. The place is ours. No one can come and kick us out. It feels like we have a guaranteed roof above our head, forever! The comfort of a homebase, knowing you can return there and relax: that is what it feels like and that feeling is priceless!
Next to that, we can do what we want: want to paint, reorganise, renew something,… Just do it. We own it (okay, maybe some urban construction rules limit us)
Having an asset like this also is a form of pension saving. When we are old and would need to move to a retirement home or so, we can always sell the house. The house might be old, the value of the land where we live is “guaranteed” due to the limited availability.
That all sounds good, so, Why this post?
The costs!
The last years, we have seen some costs that were thrown to us and it does not seem to stop.
Transforming a house into what your ideal house looks like is not free. There are only 2 things left on our list. Question is: will a new list pop up? I see already some garden items that could improvement – and I am not talking small actions. In our FI planning tool, I try to enter these works so that we see the impact on our FI date. It gives perspective.
Then there is the regulations that impact you. Yes, that can happen. We got a new street and sewer, and that comes with new rules. We need to separate our roof water from the household water. I do understand this. It is just a 5K rule that sneaks upon us.
There are the maintenance cost. Right now, we are doing some preventive maintenance on our roof. There is the chimney, the water system,…
After living here, some of these items did get factored into our monthly budget and life happens budget.Thanks to that system, we can cope with the random pattern and get not stressed when a big bill hits. So far, so good. Time will tell
The alternative – renting
Would renting be an alternative? To be honest, we never have asked ourselves this question. There are people out there that do exactly this: sell the house, activate the equity and start renting.
What would be the drivers/factors to consider.
amber tree leaves 
Financially the debate between home ownership and renting can easily be concluded (both in favour of renting and ownening) by just using a spreadsheet. But the emotional part of home ownership is more difficult. The increased flexibility you have with making changes (which are harder with a rental property) can be of great influence on the decision. The only one that can answer the question “what’s best” is you!
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On an emotional level, it is complicated. In the end, for us it comes down to this: no intention to move the next 15 years so no need for housing flexibility; not wanting to depend on others; financial aspects are less of a concern, given we own already 75 PCT of the house. That is why I think we will keep the house.
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The biggest financial reason for us, is when we get older, we won’t have any mortgage cost we have to pay. We hope to live as long as possible in our own home, and eliminating as much cost in the future is worth it. Even though this means we have to pay (sometimes a lot) for maintenance stuff until then.
Prior to our current home, we rented. But we didn’t like the dependence on the housing corporation. If our target is to achieve as much freedom as possible, owning a home is definitely a part of it.
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There is a very cool calculator from the nytimes that might help. It takes into account not only the difference in the costs of renting vs buying but also the opportunity cost of not putting your money in other investments, in particular the value of the downpayment.
https://piggy-banking.com/
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In your position I would certainly keep the house.
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If we had remained in Gent I would have been Fi by now (renovating an old farmhouse soaks up A LOT OF cash). But I am pretty happy where we live now. It suits my personality type very well. It is what it is; working a little bit now and then is a great buffer for those unexpected costs that might pop up. You just work a month or two more then…
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The 5k cost to separate your waste water is quite a bummer. Lots of people are and will get impacted by this in the future and the costs can indeed be pretty high if a contractor needs to do a lot of work.
I never really thought about renting for the long term, there’s great comfort in being the owner of your own home. The joy of buying or constructing a house if that you can modify or improve it as much as you want.
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bummer indeed. In the end, I am happy to (almost) own the house. It is a lot of “hidden” money that we have that we can free hopefully later.
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We bought our third property. Before and between I (and then we) rented several aprt. (more than 10). There is no perfect house because we are changing and our wishes and needs are changing, so I am mature enough to thing in numbers and to try to replace only what it needs. Now I choose to pay to the bank same amount paid to the owner and to live in (a little) better conditions because we don’t move in the next several years, and the mortgage will finish but the rent never .
But emotional part of home ownership cannot be counted. And I know people that cannot support the idea to pay to the bank. So again, everyone is unique.
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I am not owning the house, just rent as this is simply fix cost per year. All maintenance costs are for the landlord. I have no debt and put my cash at work instead of putting myself in debt. In your case, owning a house is a good asset when you share the costs with your partner. Once paid off, you can add more money in your ETF and options strategy
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