mathmannix wrote: Keyman wrote:
ucim wrote:...you don't actually own the thing you have, if you own it on borrowed money (using it as collateral).
Sorry, that is not correct. The Lender does not own the asset. The Borrower owns it. Then Lender will have some lien against it, and may foreclose and take ownership in event of default, but "you" own the thing.
I thought ucim's explanation was right.
Perhaps it's different in different places, or people just use the word "own" differently, but my understanding and usage of the word is that the bank owns my house (or at least most of it), since I've only been making payments on it for a few years, and the bank bought the house from the previous owners (or their bank). At best I could consider myself the part owner now, and eventually I hope to become the sole owner when I finally pay off the bank and own the house outright.
And even when I eventually pay off the house, I'm not sure I could really be considered a true owner, since if I don't pay taxes on it to the government, the government will take away my house (or find another bank to legally do so.) That makes it seems like ultimately the government owns everything...
It depends what you mean by actually
. I mean, in practical terms you can look at it as though you part-own the house, but that's not quite right. You
own the house, and separately you owe money to the lender. And in a third leg, you have offered the lender a "charge" (in English law; probably the same thing as a lien) on the house as security against the loan.
It's kind-of part ownership in that if you sell it, you would then pay back the lender so effectively you'd get some of the sale price and the lender would get some. But the amount the bank gets back depends on how much you borrowed initially and how much you paid back since; the amount you get is the difference between that and the sale price you get, which may be similar to, higher than or lower than the price you paid originally. So you part own it in a share that depends on the market value of the house at a given time, not on how far through the repayment process you are. (This is how you can get "negative equity": literally your share in the house is a negative proportion, i.e. the lender's share is more than 100%). Also there are all the agents' fees, taxes etc., which make selling the house a lossy process.
It's also not really a shared ownership in that the house is security or collateral for the loan; if you stop paying back the loan you're in breach of contract and the lender is allowed to take possession of the house as a result. They aren't necessarily obliged (although this probably does depend on jurisdictions / customs) to give you your "share" of the proceeds when they sell it. Repossession is a gnarly exceptional thing that isn't supposed to happen; if it does you'll
probably end up coming out of it much worse than your apparent equity in the property before the repossession would suggest. It's also bad for the lender
: it's a hassle and a lot of legal crap, and they can also come out of it badly: for example if the market price has gone down and doesn't cover the outstanding loan.