"Thousands" with BOE trackers face mortgage interest rate rise

Graham_Devon

chucknorris wrote: »

I find it hard to respond because I don't think you understand the business, you are ignoring the rental profit which is the most important, i.e. the foundations upon which you are building up the business.

Think this is why Thrugel was at pains to make sure "amateur" was specified clearly.

On the other thread, it seems there is little, if any profit, and rates at 4.99% will wipe any profit out for a handful of the people commenting, especially the bloke with 5 BTL mortgages.

Thrugelmir

chucknorris wrote: »

I suspect that you probably have a bit of a chip on your shoulder because you didn't invest years ago when you probably could have and you can now (with hindsight) see that you missed out. Which is why you like to think that those who have been successful have just been lucky and the those who failed or are failing are getting their just deserts (the latter part is mainly true of course).

Residential property in the broadest sense is neither my skill set nor an attractive tax efficient investment.

So I use my time in more productive areas. Unfortunately making money for others. But earning a kickback in the process.

Certainly no chips on my shoulder. I've shredded apart many a business plan. To the same degree many don't produce one so are really flying on a wing and a prayer. With no defined exit route even if they do make it work.

chucknorris

Thrugelmir wrote: »

Residential property in the broadest sense is neither my skill set nor an attractive tax efficient investment.

You probably didn't realize that I deleted that post about the same time that you were responding to it.

warwicktiger

I'm not in the BTL market, but it does strike me that a lot of people with short memories of historical interest rates have jumped in. Near 100% BTL mortages at rates of 4-5%, rental yields of 6-8% and the prospect of capital gain over the longer term, easy money.

Now that real, ie actual rates charged are going to go up, yes to rebuild balance sheets when the music stopped then a lot of people are going to catch a cold.

Now, before you think I am slighting the new generation of BTL holders, lets think about the consequences. Mortgage failures, repossessions, tennants pushed out, loads of properties on the market, a drop in house prices mainly at the lower end of the market.

Yet another ripple from 2008.

As a residential property owner with a (small) mortgage I really do wonder if I should sell now. Interest on my equity would not pay (current) rent levels, but I would have locked in my equity in terms of cash in the bank, and wait for the fall that will follow before buying again?

chucknorris

To those of you who have had the BOI shock letter, you have my sympathy.

But I have to say a few years ago when all the fuss was about collars on trackers. I immediately checked through my mortgage offers (there weren't any collars) but I did note the 'exceptional circumstances' etc clauses which I too may be hit with at some point in the future. Although there wasn’t anything as specific as a clause that allows the margin (differential as they call it) to be adjusted, that I would have found alarming and been wary of it.

Surely when all the fuss was going on about collars on tracker mortgages a few years ago you would have checked your mortgage terms and conditions?

I won’t like it if it hits me, it will cost me over 20k a year if my rate went up to 4.5%. But I can understand it, the lender does this to protect themselves so that they can offer good deals that are cut down to the bone. If they had to leave enough profit in the product to cover every eventuality, the deals would not have been so good in the first place.

chucknorris

warwicktiger wrote: »

As a residential property owner with a (small) mortgage I really do wonder if I should sell now. Interest on my equity would not pay (current) rent levels, but I would have locked in my equity in terms of cash in the bank, and wait for the fall that will follow before buying again?

Now is not the time to STR, think very carefully before doing something so drastic.

dryhat

chucknorris wrote: »

I won’t like it if it hits me, it will cost me over 20k a year if my rate went up to 4.5%.

What do you mean by this?

cotleigh

chucknorris wrote: »

I can't see where they are coming from because anyone who is in this situation would almost have certainly taken the mortage out when the base rate was 5% (or subsequently gone up to 5%) when they took these products out!

But I can certainly sympathize with them one minute thinking they are on a greatest deal ever then opening a letter to find out they have just slapped in the face.

If it happened to me (and it could) I would momentarily be !!!!ed off but it wouldn't take long for reality to sink in and realise that I have a had a good run out of it.

Agree. We have some BTLs that are 1% over BOEBR, which is great while the base rate stays this low.

But we got those loans, and worked out that the figures made sense, when we were paying 5 or 6%.

So if our rate went back to "normal" we'd still be OK, although making less profit.

Anyone benefitting from the last few years of stupidly low interest rates who hasn't used this "windfall" to pay off some of their debt deserves all they get when rates finally rise again.....

chucknorris

dryhat wrote: »

What do you mean by this?

Isn't it self explanatory? It my mortgage rates went up from their current rate to 4.5% I would be 20k worse off per annum. I don't know what part of it that you can't understand, I thought that it was quite clear, please elaborate.

dryhat

chucknorris wrote: »

Isn't it self explanatory? It my mortgage rates went up from their current rate to 4.5% I would be 20k worse off per annum. I don't know what part of it that you can't understand, I thought that it was quite clear, please elaborate.

So still making a profit, though?