Gordon, What are your thoughts on my debt to income level etc?We do need to be careful in terms of being overly cautious around debt.
Prudent borrowing is great way to acquire assets and grow wealth.
It is not always the right decision to pay down debt.
Tell us more about how you borrowed please. I’m interested in seeing how easy it is to borrow. Because I thought your work salary might have prevented all the mortgages.
We do need to be careful in terms of being overly cautious around debt.
Prudent borrowing is great way to acquire assets and grow wealth.
It is not always the right decision to pay down debt.
Wise not to take as much as they are willing. As I suspected they are willing to lash it out. Are you willing to divulge which bank offered the most. If not, pm me in total confidence. Also would like details on your tenancy 10k problems, in public or pm. Want to always understand the mistakes us landlords make and how to not make them. Like everybody I was too naive originally.
Can you check if moving your business to one bank will get you a better interest rate. Owing 1 mill gives you leverage.
Your right with the LTV's i set it at that based on the LTV interest rate rather than what my exact LTV is right now. I have some 50pc LTV where it might be closer to 40-45pc as well. Its just easier to read i think.I would suggest reducing LTV on rental 3 and rental 5
Which you give as 80pc and 70pc respectively
But by my calculations they are actually 70pc and 63pc
So to reduce to 50pc only requires repaying 50k
And 30k
Then over time, with capital appreciation if you keep paying interest only and if the properties appreciate by 100% (10 years time)
The LTV will then be 25%
Amen to that, I got such a strong reaction on this site two years ago to a 50 k ten year mortgage ( 540 per month repayments ) @5.7% I had on a property bringing in 12k per annum NET, that I paid it off less than a year into the term.
Had I instead not been fickle and swayed by ultra cautious opinion, I could have bought a brand new three bed house in castletroy Limerick for 220 k cash, I paid off that loan and put the money in European equities and I'm down about 5% today and let's just say houses in Limerick are in a different place to 2017
Some people believe unless your borrowing at below 3%,its a disaster
I think hindsight is 20/20. Luck plays a major role and i try to learn from your mistakes as best as you can however in your case its impossible to time it. At the time when i bought my 3rd property i had the opportunity to get a loan then as well where i could have got another property and made 100+k net profit on it. I choose not. It can go the other way as well. I do know of people over leveraged who have lost everything close to retirement and that is a position i want to avoid. Likewise if you bought equities at the bottom, you could have trebled or quadrupled your principle. As long as your finances are in the positive and growing im happy.
Depending on your attitude to risk, you need to play to your strengths and to some 5pc is too high and to others its acceptable. Both are ok depending on the person and you have ensure you did your best in ensuring your affordability.
Shouldn’t that read if the properties appreciate...And my other point was the LTV will naturally reduce all by itself as the properties appreciate. Even if you just pay interest only.
It's a mistake to only focus on interest rates, paying off debt means having less cash to buy other things
Over the long run, they will appreciate. In the short to medium(5-10yrs) i expect we will have some form of recession. No facts to back that up. Its just my gut feeling and i hope im wrong.I don't think 4.5 versus 4.4 makes much odds
And not suggesting you rush into paying down the 30k and 50k
If you gradually pay down those amounts then you're in fairly secure position
And my other point was the LTV will naturally reduce all by itself as the properties appreciate. Even if you just pay interest only.
Gordon, What are your thoughts on my debt to income level etc?
I'd tend to agree with @Gordon Gekko
Even stress testing your scenario (sadly I've played around with a few scenarios over the weekend to see when it becomes worrying);
if you convert these to P&I mortgage over 20 years, interest rates increase to 6.5% and a 20% drop in Rent, they're still cash flow positive (after tax). They're the kind of scenarios you need to be looking at so you're not forced into a sale if you can't meet repayments.
But that doesn't get away from the fact that you are highly concentrated in a single asset class.
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