My Interest rate gamble pays off again!

wotsthat

Percy1983 wrote: »

My point is yes reno man and many other took a small gamble at the time as interest rates could go a little up or down, the gamble as do you save a little but risk a potential small rise, then boom 0.5%, lucky as hell.

Interest rates dropped so reno calculated/ gambled that they would stay low AND he borrowed the maximum possible on IO using the repayment part of the mortgage to renovate the house.

The gamble was that interest rates wouldn't stay low (and he'd be out of a house) or they would (and he'd have a much larger, more valuable house than he'd ever be able to get if there hadn't been a recession). You might call that a small gamble - I wouldn't.

I'm not his biographer - this stuff is in the thread.

Percy1983 wrote: »

I many respects me going a tracker now would have been a greater risk for very little reward, it could have saved a small amount each month but interest rates can only go up from here so great risk and little reward, hence I chose to fix for 5 years (on an impossible to get mortgage apparently).

As you say, you (and I) are on fixed rate mortgages. If interest rates rise we might save a few pounds, if they fall we might lose a few pounds. If you equate the risk of a fixed rate mortgage with maxing out a mortgage without the means to service it if rates rise I think you have a serious problem identifying different levels of risk.

Percy1983

My point is isn't about how I evaluate risks, the point is this was a risk and reward both of which weren't available to many, in his situation at the time I would have probably made the same choices.

I suppose all I can do is wait 3.5 years and see what happens, I doubt such a golden goose will ever be in front of me but I have made other time investments which will hopefully work out just nicely.

Mr._Pricklepants

Percy1983 wrote: »

such a golden goose will ever be in front of me but I have made other time investments which will hopefully work out just nicely.

You had your golden goose in the shape of Mrs. Percy

You sure changed your tune a lot.

Percy1983 wrote: »

Why don't all us young people just go for mass suicide?

The reason we can't buy is because we were born too late, good luck to all those left behind, sorry there will be no generation below you to support you, but you can all have 2-3 houses each.

http://forums.moneysavingexpert.com/showpost.php?p=32210567&postcount=69

chucky

Mr._Pricklepants wrote: »

You had your golden goose in the shape of Mrs. Percy

You sure changed your tune a lot.



http://forums.moneysavingexpert.com/showpost.php?p=32210567&postcount=69

He sounds very bitter



and jealous...

wotsthat

Percy1983 wrote: »

My point is isn't about how I evaluate risks, the point is this was a risk and reward both of which weren't available to many, in his situation at the time I would have probably made the same choices.

You've bought a house that was well within your income multiplier and the mortgage is affordable under pretty much all rate situations.

You're trying to tell me that under different circumstances (that reno was 'lucky' to have access to) you also would have maxxed out the mortgage on IO, relying upon rates not moving up and without a repayment vehicle in place other than a hope you could increase income? Sorry don't believe you.

Percy1983

Mr._Pricklepants wrote: »

You had your golden goose in the shape of Mrs. Percy

You sure changed your tune a lot.



http://forums.moneysavingexpert.com/showpost.php?p=32210567&postcount=69

Don't call the Mrs a goose! :rotfl:

I will say we did save a total of approx £8-9k in interest compared to if we didn't swap things around, as I have said before it wasn't about avoiding paying the debt, it was about avoiding paying the interest.

I still stand by those comments, move us both back a generation and we could have bought a house 5-8 years earlier, the delay was nothing to do with iphones and 5 holidays a year.

Interestingly renoman is applauded for his interest rate savings, yet when me and the wife to be decided to cut the interest rates on all of our combined debts and succeeded massively it is somehow morally wrong? please somebody tell me the difference.

I can do a simple example, you have a credit card with £1200 and you get rate jacked to 29.9% and you can afford to pay £100 a month which will mean it would be clear in 15months.

Now a good friend/relative/partner then applies for a 0% credit card and you transfer the balance to them and pay them £100 a month and clear it in 12 months.

What is the problem if all stick to the agreement and it all gets paid?

Percy1983

wotsthat wrote: »

You've bought a house that was well within your income multiplier and the mortgage is affordable under pretty much all rate situations.

You're trying to tell me that under different circumstances (that reno was 'lucky' to have access to) you also would have maxxed out the mortgage on IO, relying upon rates not moving up and without a repayment vehicle in place other than a hope you could increase income? Sorry don't believe you.

Dare I say the bigger difference is I am not bothered about a bigger house or keeping up with the Jones's as such, If a could have got my mortgage more than £30 a month cheaper then I may have took a gamble on a tracker, but I couldn't get a 0.25% + base tracker or such could I.

ess0two

Mr._Pricklepants wrote: »

You had your golden goose in the shape of Mrs. Percy

You sure changed your tune a lot.



http://forums.moneysavingexpert.com/showpost.php?p=32210567&postcount=69

He should be stuffing that goose instead of posting on here:money:

N1AK

Percy1983 wrote: »

My point is isn't about how I evaluate risks, the point is this was a risk and reward both of which weren't available to many, in his situation at the time I would have probably made the same choices.

I genuinely don't believe that to be true. Most people would not risk the financial loses that would be incurred if rates increased, or their ability to pay was restricted in that manner.

I could have bought a house worth 2-3 times as much 2 years ago and hope that low rates and HPI would make me money (it looks like they probably would have) but chose not to take those risks.

If someone said to you that you could bet everything you had on rolling 3 or higher on a 6 sided dice and if you won you'd keep everything and get twice as much as winnings would you take it? I know I wouldn't because the benefit of winning (a more comfortable lifestyle) isn't worth nearly as much as the downsides of losing what I already have (decades of cutting back on spending and saving).

wotsthat

Percy1983 wrote: »

Dare I say the bigger difference is I am not bothered about a bigger house or keeping up with the Jones's as such, If a could have got my mortgage more than £30 a month cheaper then I may have took a gamble on a tracker, but I couldn't get a 0.25% + base tracker or such could I.

I think you're still misunderstanding the difference in risk between a few quid difference if a tracker goes the wrong way or losing your house if it goes the wrong way. Seeing a £30/ month gamble as being in the same league as a losing your house gamble is evidence of this.

Percy1983 wrote: »

Interestingly renoman is applauded for his interest rate savings, yet when me and the wife to be decided to cut the interest rates on all of our combined debts and succeeded massively it is somehow morally wrong? please somebody tell me the difference.

A slight touch of hypocrisy perhaps. Other people do alright because of blind luck or not being born in 1983; you're doing alright because of your financial astuteness.