Mortgages are p#@$ cheap...

[MrBen]

...at the moment.

It's almost free money for a few years. My fixed rate is up and thought that was decent at 2.3% but now I'm getting quoted as low as 0.99 variable.

Remortgaging before the election if you can makes a lot of sense. Using cheap debt sensibly can also make a lot of sense....especially if you think you're income might rise over the next ten years.

[MrBen]

It also indicates just how imbalanced the economy currently is.

[Otta]

I've got another year of paying around 5.5% :(

[Jeremy]

MrBen Wrote:

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> I'm getting quoted as low as 0.99 variable.

What bank is that with? Is that as in .99 above base rate, or .49 above base rate? Booking charge?

[MrBen]

HSBC...and a two grand booking fee. Still works out though....if you have 60% LTV you get a pretty wide choice...

http://www.theguardian.com/money/2014/oct/20/hsbc-lowest-ever-mortgage-catch

Otta - dont worry. I'm 99% certain you'll get better than 5.5% in a years time.

[Jeremy]

Hmm... a discounted rate for two years, after which it goes up to 3.95%. Obviously you'd then shop around again, but the problem is that in two years time mortgages might be quite a bit more expensive. It's always a gamble, either way.

[DaveR]

Lenders consider mortgages at 60% LTV as practically risk free, particularly where the teaser rate is short term (within 2 years either you'll go elsewhere or they'll have another look at you). They bank the ?2k fee and look for the next punter. Also, 60% LTV customers tend to be desirable customers for banking generally, so if they hook you with a very good mortgage deal they'll then try and persuade you to move all your banking/borrowing. HSBC in particular have been pursuing this strategy pretty consistently since 2009.

None of which means it's not a good idea to take a good deal if it's on offer. There are five year fixes around for less than 2.5%, and a big fee is easier to swallow spread over 60 months.

[MrBen]

Of course. They all do.

The Chelsea's 2 year 1.64% fixed rate, with a ?345 product fee is another example. If you want to draw equity and use it as leverage to invest in something else...it's got to be one of the cheapest loans you're ever going to get.

"Would you like to borrow ?100k for 2 years? I'll charge you 1.64% interest is that ok?"

"Yes please".

You could stick that in a boring unit trust and make money on it. And pay the principle back. Or buy some oil. Or Euros. Whatever's looking good. If you can handle the down side and uncertainty of rates in year 2,3 or 5...and you think your property will hold its value there or there abouts (+/- 10%) it's a no brainer.

[Jeremy]

DaveR Wrote:

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> if they hook you with a very good mortgage deal

> they'll then try and persuade you to move all your

> banking/borrowing. HSBC in particular have been

> pursuing this strategy pretty consistently since 2009.

Indeed. In fact they'll only offer you a BTL mortgage if you shift your current account over.

[El Pibe]

what does phas mean? just curious.

[Jeremy]

Phas?

[MrBen]

If you'd taken out ?100k from your mortgage and bought a certain model of 1980's Ferrari a few years back. You would have almost doubled your money.

[Lowlander]

MrBen Wrote:

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> Of course. They all do.

>

> The Chelsea's 2 year 1.64% fixed rate, with a ?345

> product fee is another example. If you want to

> draw equity and use it as leverage to invest in

> something else...it's got to be one of the

> cheapest loans you're ever going to get.

>

> "Would you like to borrow ?100k for 2 years? I'll

> charge you 1.64% interest is that ok?"

>

> "Yes please".

>

> You could stick that in a boring unit trust and

> make money on it. And pay the principle back. Or

> buy some oil. Or Euros. Whatever's looking good.

> If you can handle the down side and uncertainty of

> rates in year 2,3 or 5...and you think your

> property will hold its value there or there abouts

> (+/- 10%) it's a no brainer.

Oil? With the Saudis going the way they are and demand down, watch it go towards $25 a barrel. Surely you mean olive oil?

[DaveR]

It should be said that none of this is surprising or even novel; the only thing that's new is the number and diverse nature of people now sitting on an asset valuable enough to make it worth leveraging.

[Mick Mac]

My brother just re-mortgaged to a 10 year fix of 2.99% which I thought was a good combo of reasonable long term rate and certainty over future outgoings plus no more fees for 10 years.

[????]

Friday fun on here. Like being at a Mortage Brokers convention......Zzzzzzzzzzzzzzzzzzz

[Otta]

Get the tunes on Quids.

[MrBen]

DaveR Wrote:

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> It should be said that none of this is surprising

> or even novel; the only thing that's new is the

> number and diverse nature of people now sitting on

> an asset valuable enough to make it worth

> leveraging.

I'm not saying it is. Leveraged debt, leveraged assets...not new. What is new is just how low these rates are. They are unprecedented.....even a year ago everybody was predicting the opposite.

> "diverse nature of people now sitting on an asset valuable enough to make it worth leveraging."

True. But how many of them actually do? And bizarrely millions moan about their bills but can't be bothered to move off their standard mortgage deal. If your future is uncertain and you're risk averse...this is an opportunity to lock into a long term fix rate at a great deal....and to use the amount you save to over pay. If you have some confidence about your future and appetite for risk...think about how you can use these rates to do something...whether it's cash to start a business, put on a new extension or get a decent car for much cheaper than a car loan

[ernesto]

the economy is fecked when you see rates like this.

in a totes hypothetical scenario, it possible to borrow enough to cover yer kids future uni fees say, and without recourse to belarus shell companies and offshore blind trusts in tajiikistan, it is possible to actually get someone else to not only cover the repayment, but get the debt eroded at a decent % a year- not gordon gecko material, but pretty telling

broken brittan

[MrBen]

Lowlander Wrote:

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>

> Oil? With the Saudis going the way they are and

> demand down, watch it go towards $25 a barrel.

> Surely you mean olive oil?

Sounds like your confident. So time to take a short position with your 100k then?

[MrBen]

Ah feck it. Get the tunes on quids!

[ernesto]

there are a few people in the hood who are sitting on 7 figures of equity, with sorta irrelevant niggling debts here and there. thats alot of leverage to play with

[Mick Mac]

???? Wrote:

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> Friday fun on here. Like being at a Mortage

> Brokers convention......Zzzzzzzzzzzzzzzzzzz

I thought about saying the same but I'm not a kill joy like yourself. Join the fun or say nought.

[Help-Ma-Boab]

Quick firm handshake and a rendition of Burns anyone?

[Jeremy]

ernesto Wrote:

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> the economy is fecked when you see rates like this.

>

> it is possible to actually get

> someone else to not only cover the repayment, but

> get the debt eroded at a decent % a year- not

> gordon gecko material, but pretty telling

It's not really indicative of a weak economy. It's about risk... in your/MrB totes hypothetical scenario, the mortgage lender have almost no risk. You, on the other hand, would be taking on significant risk by gambling your property on whatever "sure-fire" fund/asset you'd ploughed all the borrowed cash into. Rather you than me...