Is your mortgage a debt? Mmmm that’s a tough one!

If you own your home or want to buy one at some stage then it is important that you consider a number of factors. Now unless you have won the lottery or have a rich aunt who just left you a bucket of cash then you’re going to have to get a mortgage. The trouble with a mortgage is that when you sit down and look at your monthly expenses it stands out like a sore thumb - taunting you.

In recent conversations that I have had with friends the discussion turned to mortgages and whether or not they are true debt. Ok I know you going to be scratching your head but bear with me on this one.

The general argument goes that a mortgage is a debt. The word mortgage itself comes from the Latin word “mort” and mortgage essentially means “until death”. Basically back in the old days when you took out a mortgage you had it until you died. Nowadays you usually have a mortgage for 30 years which is a lifetime but you expect to still be standing at the end of it. When you look at it from a historical perspective you were in debt until you died. It’s as simple as that.

Today it seems to be the case that everyone has a mortgage or is in the process of getting a mortgage – credit crunch aside. Most of my friends seem to think that a mortgage is a debt and ask any accountant and he will define your home as a liability given that it is costing you money ever month. I have a problem with this. Ok I agree with the accounting definition and agree with the historical perspective but I want you think about it in another way.

Let’s lay it on the table. In the last few years there has been a mania about buying houses. I’m not going to start discussing who is to blame – not here anyway that will come in another article. No what I want to point out is that there has been a madness of the crowd that had been driving property prices through the roof. If you didn’t flip properties in your spare time you were a nobody. It got to be ridiculous. There was a complete change in the way people thought about their homes.

You see people not longer talked about homes – they talked about houses and apartments and flipping and rental yield. I can’t emphasise enough how out of hand it got. The thing that got lost in the haze for many of us is that we were thinking about our homes in the wrong way. We began to think about our homes as assets and as cash machines. If they went up in value then great! But what we failed to see is the simple truth that they were our homes.

These are the places where we bring up our families, where we create all those memories. Ok this may sound sentimental and a bit naïve but you have to see your mortgage from the point of view of a necessary evil. I would never put mortgage debt in the same category as credit card debt for the simple reason that we will always need a roof over our heads. We will always need a place to keep our family safe. We don’t always need that new 32inch plasma screen TV.

Some may argue that renting is cheaper and there is some truth to that. The thing is with a mortgage is that you are acquiring ownership of the property. You know that some day you will own that property outright. When you rent you are on a never ending treadmill of monthly payments that lead nowhere.

What you have to ask yourself is this. What is my attitude towards my mortgage? Do I look on it as a monthly burden that it depresses me to even think about? Or do I look on it as an enabler – something that allows me to enjoy the comfort and security of my own home safe in the knowledge that one day I will own it outright?

You see a mortgage is a debt in the technical sense but in reality it is one of those facts of life like death and taxes that we need to embrace and accept. We need to get over our obsession with buy to let property or property flipping and we need to focus on building a home on the foundation of our mortgage. If you want to be happy with your mortgage then you need to change your attitude towards it. See it as a means to an end rather than something that is holding you back financially. Otherwise you are in for a lot of pain and mental anguish as your mortgage continues to come out of your bank account for the next 30 years. My advice? Get over it.

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