What am I missing?
Discussion
I’ve just looked on money saving expert and you can get a £100k mortgage fixed for 10 years at 2.09%. LTV 50% or less.
What’s stopping people taking this remortgage on, and then investing the money? Surely one would expect to be able to achieve significantly better than 2.09% every year over the next 10 years?
What’s stopping people taking this remortgage on, and then investing the money? Surely one would expect to be able to achieve significantly better than 2.09% every year over the next 10 years?
JapanRed said:
Haha fair enough. Wouldn’t have to be with the whole £100k though. Could just take an extra £5-10k when you remortgage and invest that.
I’m constantly reading on PH that people are making big % profit each year, so presumably they are high risk takers.
Or the internet makes it easy to embellish and people seldom highlight the big losses.I’m constantly reading on PH that people are making big % profit each year, so presumably they are high risk takers.
A similar concept to the old "endowment" mortgage policies that were sold in the 80s .....you just pay interest only on the mortgage and invest the rest in the market which should outgrow the interest so in 25 years time you pay off the mortgage and pocket the difference....
...it didn't always work out like that though......
...it didn't always work out like that though......
Sarnie said:
JapanRed said:
What’s stopping people taking this remortgage on, and then investing the money?
......Lending criteria........I’m not planning to do any of this by the way. Balls not big enough and already skint
JapanRed said:
Ah there’s the catch, thanks Liam. If I remortgaged my house to a different lender, current mortgage say £100k but I remortgage to £150k is there something in the small print saying where that £50k must go?
I’m not planning to do any of this by the way. Balls not big enough and already skint
Yep, you have to explain where the funds are going............and investing it in the stock market would be a no no............I’m not planning to do any of this by the way. Balls not big enough and already skint
Sarnie said:
JapanRed said:
Ah there’s the catch, thanks Liam. If I remortgaged my house to a different lender, current mortgage say £100k but I remortgage to £150k is there something in the small print saying where that £50k must go?
I’m not planning to do any of this by the way. Balls not big enough and already skint
Yep, you have to explain where the funds are going............and investing it in the stock market would be a no no............I’m not planning to do any of this by the way. Balls not big enough and already skint
JapanRed said:
I’ve just looked on money saving expert and you can get a £100k mortgage fixed for 10 years at 2.09%. LTV 50% or less. What’s stopping people taking this remortgage on, and then investing the money? Surely one would expect to be able to achieve significantly better than 2.09% every year over the next 10 years?
Well, if you'd done it on Monday you'd have lost £10,000 already (Thursday), and be carrying a 25 year commitment to pay interest on the £10,000 you've lost....We've over paid our mortgage quite substantially over the years and I've been so tempted to draw down and invest, but alas my balls are not big enough either.
You can even borrow money at 0% and invest, just stack up a few 0% credit cards, I've about 10K earning me 1% (not taking into account the transfer fee) safely in premium bonds, and there's always the extremely small chance I could win big. I didn't put it in investments just in case I needed to pay off the cards in a hurry for any reason.
You can even borrow money at 0% and invest, just stack up a few 0% credit cards, I've about 10K earning me 1% (not taking into account the transfer fee) safely in premium bonds, and there's always the extremely small chance I could win big. I didn't put it in investments just in case I needed to pay off the cards in a hurry for any reason.
Year and a half back, I bought a new to me car. Could have paid cash, but decided to take a personal loan instead. Why? 3.5% APR on the loan is way less than one can achieve in the markets. I already had some individual shares and I added passive trackers and what not.
As of the start of January, I was a genius, 10% better return from my investments than the cost of financing the loan.
Close of play yesterday, I’m 1.5% worse off from not just paying cash for said motor.
By close of play today, I fully expect to be 3.5% worse off.
This drop pretty much came out of nowhere. Loads of smart folk saw (or at least claimed they saw!) the tech bubble bursting and the financial crash coming. Haven’t yet come across anyone trying to claim they had pre-emptively shorted the market on the basis rural Chinese folk, bats and pangolins were going to cause a rout. You’d need balls as big as church bells to go ahead and remortgage your house to whack the funds in the markets.
As of the start of January, I was a genius, 10% better return from my investments than the cost of financing the loan.
Close of play yesterday, I’m 1.5% worse off from not just paying cash for said motor.
By close of play today, I fully expect to be 3.5% worse off.
This drop pretty much came out of nowhere. Loads of smart folk saw (or at least claimed they saw!) the tech bubble bursting and the financial crash coming. Haven’t yet come across anyone trying to claim they had pre-emptively shorted the market on the basis rural Chinese folk, bats and pangolins were going to cause a rout. You’d need balls as big as church bells to go ahead and remortgage your house to whack the funds in the markets.
Edited by emicen on Friday 28th February 08:24
I've had similar thought the past few days given the recent market drops.
My wife has an endowment which matures in 2 years time. We could wait 2 years and invest it then or borrow from our mortgage, invest it now and pay it off when the endowment matures.
Effectively we did similar some years ago by investing in equity funds as a payment plan to pay off our interest only mortgage.
My wife has an endowment which matures in 2 years time. We could wait 2 years and invest it then or borrow from our mortgage, invest it now and pay it off when the endowment matures.
Effectively we did similar some years ago by investing in equity funds as a payment plan to pay off our interest only mortgage.
The other issue is tax. I seriously considered this morning drawing down some of our mortgage which is currently fully offset and trying to catch a falling knife. The knife I was looking at is currently yielding 5.2%, my mortgage rate is 1.99%. 320bps looks like a good spread but pay almost 50% tax on the income and then that spread is more like 60bps. From a risk return perspective that didn’t seem worth it.
emicen said:
Year and a half back, I bought a new to me car. Could have paid cash, but decided to take a personal loan instead. Why? 3.5% APR on the loan is way less than one can achieve in the markets. I already had some individual shares and I added passive trackers and what not.
As of the start of January, I was a genius, 10% better return from my investments than the cost of financing the loan.
Close of play yesterday, I’m 1.5% worse off from not just paying cash for said motor.
By close of play today, I fully expect to be 3.5% worse off.
This drop pretty much came out of nowhere. Loads of smart folk saw (or at least claimed they saw!) the tech bubble bursting and the financial crash coming. Haven’t yet come across anyone trying to claim they had pre-emptively shorted the market on the basis rural Chinese folk, bats and pangolins were going to cause a rout. You’d need balls as big as church bells to go ahead and remortgage your house to whack the funds in the markets.
I wouldn't say it came out of nowhere. What's bizarre is how long it's taken markets to react to something with a very uncertain outlook.As of the start of January, I was a genius, 10% better return from my investments than the cost of financing the loan.
Close of play yesterday, I’m 1.5% worse off from not just paying cash for said motor.
By close of play today, I fully expect to be 3.5% worse off.
This drop pretty much came out of nowhere. Loads of smart folk saw (or at least claimed they saw!) the tech bubble bursting and the financial crash coming. Haven’t yet come across anyone trying to claim they had pre-emptively shorted the market on the basis rural Chinese folk, bats and pangolins were going to cause a rout. You’d need balls as big as church bells to go ahead and remortgage your house to whack the funds in the markets.
There's someone on here who says that instead of buying a car for cash you should buy a cheap flat in Glasgow. Then use the rent to pay the car loan / lease. At the end of the term you've still got the flat, so the car was effectively free. What could possibly go wrong with that?
Sheepshanks said:
emicen said:
Year and a half back, I bought a new to me car. Could have paid cash, but decided to take a personal loan instead. Why? 3.5% APR on the loan is way less than one can achieve in the markets. I already had some individual shares and I added passive trackers and what not.
As of the start of January, I was a genius, 10% better return from my investments than the cost of financing the loan.
Close of play yesterday, I’m 1.5% worse off from not just paying cash for said motor.
By close of play today, I fully expect to be 3.5% worse off.
This drop pretty much came out of nowhere. Loads of smart folk saw (or at least claimed they saw!) the tech bubble bursting and the financial crash coming. Haven’t yet come across anyone trying to claim they had pre-emptively shorted the market on the basis rural Chinese folk, bats and pangolins were going to cause a rout. You’d need balls as big as church bells to go ahead and remortgage your house to whack the funds in the markets.
I wouldn't say it came out of nowhere. What's bizarre is how long it's taken markets to react to something with a very uncertain outlook.As of the start of January, I was a genius, 10% better return from my investments than the cost of financing the loan.
Close of play yesterday, I’m 1.5% worse off from not just paying cash for said motor.
By close of play today, I fully expect to be 3.5% worse off.
This drop pretty much came out of nowhere. Loads of smart folk saw (or at least claimed they saw!) the tech bubble bursting and the financial crash coming. Haven’t yet come across anyone trying to claim they had pre-emptively shorted the market on the basis rural Chinese folk, bats and pangolins were going to cause a rout. You’d need balls as big as church bells to go ahead and remortgage your house to whack the funds in the markets.
There's someone on here who says that instead of buying a car for cash you should buy a cheap flat in Glasgow. Then use the rent to pay the car loan / lease. At the end of the term you've still got the flat, so the car was effectively free.
I don’t disagree the markets took surprisingly long to fully get scared, usually traders are a lot more jumpy than that!
Perhaps I should have written the cause / trigger / global event that precipitated the drop came out the blue.
I’m familiar with a lot of the areas groat talks of regarding BTL. You’d need about £25-30k to drop on a 2-3 bed to get the net monthly return required to finance about £15k on personal loan. Void & maintenance free etc etc. So really you’d need 2 and a few months buffer built up.
emicen said:
Over the window of investment I’m talking about, how would one see this virus outbreak coming in 2018? Up to the point my January standard monthly ISA buys were actioned, next to nothing had been said in the media about the virus outbreak.
I don’t disagree the markets took surprisingly long to fully get scared, usually traders are a lot more jumpy than that!
Perhaps I should have written the cause / trigger / global event that precipitated the drop came out the blue.
Ah, OK - ISWYM now.I don’t disagree the markets took surprisingly long to fully get scared, usually traders are a lot more jumpy than that!
Perhaps I should have written the cause / trigger / global event that precipitated the drop came out the blue.
emicen said:
I’m familiar with a lot of the areas groat talks of regarding BTL. You’d need about £25-30k to drop on a 2-3 bed to get the net monthly return required to finance about £15k on personal loan. Void & maintenance free etc etc. So really you’d need 2 and a few months buffer built up.
...and big balls to operate in that market!Gassing Station | Finance | Top of Page | What's New | My Stuff