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From the perspective of my European 100 year mortgage, 30 year fixed seems it cuts down the prices in absolute terms which offloads the risk from the buyer a bi

From the perspective of my European 100 year mortgage, 30 year fixed seems it cuts down the prices in absolute terms which offloads the risk from the buyer a bit. I wish there were laws limiting the length of mortgages to say 10 years. That would mean I had bought my house at 1/10th the price and thus at 1/10th the risk. But the question is of course is a mortgage seen as someone "paying off" a house, or simply a rent to the bank? I never intended to purchase/repay my house. The 100 year home loan is how I rent and the bank is my landlord. I take a lot of the risk for changes in the market, but also obviously the reward too (unlike a normal rental setup). I do pay it back (1/100 per year) but obviously my horizon for living in the home isn't 100 years. It's both in mine and my banks interest that my mortgage is kept at some level which is less than "one bad dip below market value", or say 2/3 or 12 of current market value. Once there, I'd rather invest the money than pay back more on the mortgage. Especially if interest rates are (a deductible) 1.5% and low risk investment yields several times that!

deleted 5y ago
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brianwawok 5y ago
You can get an interest only mortgage in the US. Removes the illusion of paying it off. Functional, it would be very very close to a 100 year mortgage (few less dollars per month that goes to principle).. Remember though, for a big part of the US, paying off your mortgage is the most important / biggest form of retirement savings. Many people make it their goal to pay off their mortgage before they retire, even if their 401k is dry. With social security and modest lifestyle, it's not a terrible decision. You can even reverse mortgage if the well runs dry a few years early..
- alkonaut 5y ago
  Yes, they used to be interest only here before, the 1% (or 2% for the first part) was added in response to risks. So basically the 1% is just that, retirement savings. Because at the end of the day it doesn't really matter whether it's 1/30 of a 30yr mortgage or 1/100 of a 100yr mortgage, that amount will be exactly what the buyer can afford. So after 30 years I'll have a home with around 1/2 a mortgage remaining. And saving a massive slump in prices, that will be a big part of my retirement savings. Having a completely paid off 30yr mortgage would be even better of course, but not hugely so. The amount left as "savings" is still the same. The longer mortgage just holds a larger risk/reward of passive income vs loss.

deleted 5y ago

[deleted]

brianwawok 5y ago

You can get an interest only mortgage in the US. Removes the illusion of paying it off. Functional, it would be very very close to a 100 year mortgage (few less dollars per month that goes to principle).. Remember though, for a big part of the US, paying off your mortgage is the most important / biggest form of retirement savings. Many people make it their goal to pay off their mortgage before they retire, even if their 401k is dry. With social security and modest lifestyle, it's not a terrible decision. You can even reverse mortgage if the well runs dry a few years early..

alkonaut 5y ago
Yes, they used to be interest only here before, the 1% (or 2% for the first part) was added in response to risks. So basically the 1% is just that, retirement savings. Because at the end of the day it doesn't really matter whether it's 1/30 of a 30yr mortgage or 1/100 of a 100yr mortgage, that amount will be exactly what the buyer can afford. So after 30 years I'll have a home with around 1/2 a mortgage remaining. And saving a massive slump in prices, that will be a big part of my retirement savings. Having a completely paid off 30yr mortgage would be even better of course, but not hugely so. The amount left as "savings" is still the same. The longer mortgage just holds a larger risk/reward of passive income vs loss.