Average age of a first time homebuyer is now over 40. Even at a reasonable interest rate, most buyers would die before they actually own the house.

I know someone living in the Netherlands (home of Lemmy.world!) that told me they had interest only mortgages that didn't pay toward the principal and that this was common over there. It seems like these new 50 year mortgages in the USA are a step going that same way. Anyone from that area confirm this?

At that point, the bank is buying the house, they're just renting it to you for a very cheap rate, with the stipulation that you're responsible for all of the maintenance and etc. The "purchase" is just you entering into a long-term rental agreement.

Not sure if this is what they were talking about, but balloon mortgages are a thing here too. I can’t ever imagine considering one, but they exist.

I'm Dutch, just bought a home, and I've never heard of that.

Edit: I think that is called an "afloasingsvrije" mortage, banks stopped providing those after 2008 for obvious reasons.

Eidt 2: Apparently it still exists, but can no longer be used to finance an entire house. From my research it is often still possible for up to 50% of a house's value. It was also not an option in the way we bought our house.

Congratulations on your new home!

Thanks for providing that info on the "afloasingsvrije" mortgages. It was a few years before 2008 when she bought, so that tracks with what you're reporting.

Here in the USA we have fixed rate mortgages, where you have a single fixed interest rate for the entire length of the mortgage, but I know that not all countries have that. From what I understand in Canada the rates fluctuate during the mortgage where you can get something like fixed for 5 years (maybe 10?) but then the rate can increase on the existing mortgage you've already got.

How does the Dutch system work? Fixed for life of mortgage? Continuously variable? Fixed for a time like Canada? Something else?

It an overall bad deal in my mind, but there are some upsides (not enough for me to take it). Assuming you get a fixed rate, you lock in your payment and your "rent"/mortgage will decline over time just from inflation eating away at it. I think most folks would love to have their rent decline by 3% every year. This effectively does that.

Additionally, if you are the homeowner instead of the renter, if the real estate increases in value, when you sell, you pocket the increase. There's nothing like that in renting.

Balloon mortgages would be good in only two situations:

• you're not planning on living in the house very long, so you likely exit before the balloon payments hit.
• you believe interest rates will decline in the next few years and you can refinance to a fixed low rate

I don't ever see myself using a Balloon mortgage. Worse, they are frequently sold via predetory lending methods. Unsavvy buyers are convinced to take a balloon mortgage not understanding the payments will rise dramatically in the years ahead. This can lead to eventual foreclosure when the owners can service the higher payments.

We have different types of mortages, but most (maybe all, at least the most common types) have a fixed rate over 30 years. Maybe variable rates exist, but they are at least very uncommon. Shorter mortages are also possible I think but are of course very expensive.

One weird thing we have is that part of the interest you pay is tax deductible. (Progressive parties are i.m.o. rightfully trying to abolish this subsidy for the owning class, but I digress.) for this reason there is a type of mortage where you first only pay the interest, and slowly start paying off more and more of the mortage, which means your net mortage fee slowly increases over time, which is nice if you expect your income to increase over those decades.

One weird thing we have is that part of the interest you pay is tax deductible.

This matches the USA system for mortgages.

for this reason there is a type of mortage where you first only pay the interest, and slowly start paying off more and more of the mortage, which means your net mortage fee slowly increases over time, which is nice if you expect your income to increase over those decades.

This sounds new to me. In the USA we do have amortized mortgages so a very high percentage of the monthly payment is interest with little going to principal. Over time that relationship flips where you're paying more principal that interest. However, in our system the mortgage payment stays the same, only how much of that fixed payment goes to interest vs principal changes.

How would that work, even on paper? Not being a dick, just don't understand. So it's literally just, "you can never own this property fully?"

How would that work, even on paper? Not being a dick, just don’t understand. So it’s literally just, “you can never own this property fully?”

Yes. The tradeoff is you have a property that is in your name (with a bank note attached), and if the property increases in value during the time you own it, when you sell, you pocket the difference. If you have a fixed interest rate, it also caps the growth of your payment for housing for the entire time you live there. There's quite a bit of value in that.

Screw .world

you....realize thats not only where this Lemmy Community is...but also your user account, right?