Surely the fees in buying/selling multiple times with Plan B would negate any saving?
Mortgage Rate Rises
- Thread starter glenimp617
- Start date
Its a big bet on a big crash.
I think for myself I don't know if I'd want the hassle of moving twice.
If it goes wrong, there is no crash. Crash is modest then you've created so much hassle for nothing
Soldato
I've always done about 50/50 overpaying and investing to make progress on overpaying but also respect that investing returns were better. Now it's no longer the case that investing returns are clearly better so the plan changes. I sold investments a couple of months back to focus on overpaying instead. I've always had 2 year trackers so the fixed term and max overpayment don't apply.
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Soldato
It’s a strategy done by many. It works when the gains in the market are greater than the cost of the mortgage. The average is 8% a year and obviously at the moment it is negative but once normality returns and markets switch to a bull phase then it does work. You need to be able to afford to put money into both the mortgage and equities (or usually ETFs) to do this.
Soldato
Once the remaining 3 years on my fixed deal have ended, I won't be fixing again. Just hammering the overpayments until it's paid off.
I can respect a 50/50 strategy as very sensible. I've seen multiple comments that overpaying a mortgage is 100% piece of mind and nothing more, but I agree with your approach a lot more.
Is that 8% in only particular funds, or across a broad spectrum of stocks, no bonds, something else?
Soldato
Trackers that cover multiple equities across multiple markets like a FTSE All World ETF.
So, someone please explain to me like I'm 5 years old. If houses are too expensive and everyone is unable to get on the housing ladder. How is it that prices are so high in the first place and where are people finding all this money to buy them? I just can't seem to wrap my head around it. I've been thinking that these prices are unsustainable for at least 10 years and yet prices just keep getting higher and never crash.
Man of Honour
A large part is down to investors, landlords can just out the rent up to cover a mortgage increase meaning they aren't forced to sell. That said given the eye watering increases that isn't a guarantee this time around.
Read a few posts up and you'll see a chappy who has done this and his mortgage matures like "today" and his stocks are worth 50% less than what he expected.
Be cautious with any internet investor advice. A lot of youth (who are overly represented online) have only known low interest rates and high stock market yields.
I'd take anything that alarmist says and dump it in the bin. Now if the BoE says it that's a different kettle of fish
Soldato
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I'm doing 50/50 personally as there are too many unknowns. I quite like being used to the higher payments just in case I get caught out with an unavoidable interest rate hike, which it looks like I will at some point.
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Soldato
Risk is always elevated with investments. There are some low risk investment strategies that people can learn from FIRE.
(I know, it was a partially loaded question
)I see this spread around multiple forums like it's gospel and if you're not doing it, you're just paying off your mortgage for piece of mind and nothing more. Overarching averages of 8% growth over donkeys years is one thing, but there's no guarantee when the landscape changes, and it's not such a great idea depending on circumstances.
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For sure, but I see so many folk quoting "average" rates of return. Forgetting that those averages are made up of lows and highs, over time. Timing is key.
Soldato
Absolutely. Everything’s down and will be for a while at the moment.
- Joined
- 30 Sep 2005
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I'm cancelling my new car order today, that money is going towards the mortgage. Think I can shave another year off it.
To be honest, that was my original plan but I got a bit carried away.
To be honest, that was my original plan but I got a bit carried away.
- Joined
- 30 Sep 2005
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haha, you do indeed. My works car goes back next Sept so I need to order something, slightly cheaper I think now
Caporegime
- People buying quite often have 2 incomes now
- Willing to spend more on mortgages
- Historically low interest rates & house prices constantly going up looks nice
- Parents/family giving people money or loans
- 95% mortgages mean deposit is very achievable
- stamp duty holidays
Its a combination of a huge number of factors with people always finding way to pay the new higher prices even though they don't want to.
Put it this way, if you had decided it was all madness 10 years ago you would have paid way more in rent than your mortgage, you wouldn't have an asset that had probably increased in value by 50% or more and you would be at the mercy of your landlord.
This is why people will do whatever it takes to get on the ladder even though everyone accepts that prices are insane. The alternative is twice as grim.