Nice People Thread No. 15, a Cyber Summer

Generali

vivatifosi wrote: »

Gen, if you happen to be around, there's someone on the holidays abroad board who is looking at living in either NY, Melbourne or Sydney. They can transfer to any of those with their firm. Thought you are ideally placed to contribute if interested.

https://forums.moneysavingexpert.com/discussion/comment/70580411#Comment_70580411

vivatifosi

Thanks Gen. I learned loads from that link, v interesting.

michaels

The perils of trying to out guess the markets

So two and a half years ago I fixed my mortgage at the historically low rate of 2.49% (about 2.55% including fees) and borrowed as much as I could with the intention of using the funds for other property purchases and or making money 'on the turn' by investing in higher paying savings accounts as at the time I could get 3% and I expected rates to increase over the period and after all interest rates couldn't fall any further...

Well I did the BTL thing then sold before the general election when I thought prices might stall and I had already made such a large capital gain that the yield was 'pathetic' and invested the funds at 3% instant access....So did savings and mortgage rates then increase?

Nope they have fallen meaning that I have effectively been overpaying about 100 basis points on the mortgage over a floating rate / set of shorter fixes costing 250 a month and now savings rates have fallen leaving me earning 2.5% on average costing another 1500pa.

You lose some, you lose some

silvercar

So two and a half years ago I fixed my mortgage at the historically low rate of 2.49% (about 2.55% including fees)

Meanwhile, I stuck to the lifetime tracker of BoE + 0.75%, and have been paying 1.25%

and borrowed as much as I could with the intention of using the funds for other property purchases and

Should have gone for an offset and not taken the money until you needed it.

or making money 'on the turn' by investing in higher paying savings accounts as at the time I could get 3%

So you still gained by 0.45%.

Well I did the BTL thing then sold before the general election when I thought prices might stall and I had already made such a large capital gain

That looks like a gain to me. Net, net what percentage did you make?

*Idly wonders if michaels actually paid some tax (CGT).*

michaels

I was on an offset tracker +1.99 (sadly when tshtf in 2007 I was not on one of the great goto rate deals) which at the time was pretty much the best you could do and did use the funds pretty much straight to buy the btl that we held for 15 months for a gross increase of value of 30% and a painful cgt bill.

GDB2222

michaels wrote: »

I was on an offset tracker +1.99 (sadly when tshtf in 2007 I was not on one of the great goto rate deals) which at the time was pretty much the best you could do and did use the funds pretty much straight to buy the btl that we held for 15 months for a gross increase of value of 30% and a painful cgt bill.

Whilst I feel your pain over the cgt bill, you must be pleased to have done your bit to keep the country's finances afloat.

Seriously, it's odd that in this country people feel that money spent by the government is wasted. In Germany, for example, people tend to feel that their taxes buy value for money.

GDB2222

michaels wrote: »

The perils of trying to out guess the markets

So two and a half years ago I fixed my mortgage at the historically low rate of 2.49% (about 2.55% including fees) and borrowed as much as I could with the intention of using the funds for other property purchases and or making money 'on the turn' by investing in higher paying savings accounts as at the time I could get 3% and I expected rates to increase over the period and after all interest rates couldn't fall any further...

Well I did the BTL thing then sold before the general election when I thought prices might stall and I had already made such a large capital gain that the yield was 'pathetic' and invested the funds at 3% instant access....So did savings and mortgage rates then increase?

Nope they have fallen meaning that I have effectively been overpaying about 100 basis points on the mortgage over a floating rate / set of shorter fixes costing 250 a month and now savings rates have fallen leaving me earning 2.5% on average costing another 1500pa.

You lose some, you lose some

So, your savings are earning the same as your mortgage rate? Where does the £1500 pa come in? Tax? Mind you, if you borrowed say £0.5m, you only need to be out by a fraction of a percent for the £1500 deficit to appear, such being the effects of gearing.

michaels

I don't actually object to paying the tax that is due and actually I think given that we limit building in this country that the gains that accrue to property owners (including PPR) should be taxed. Normally I am strictly PAYE so you don't feel the same pain in paying tax that you never get in the first place as you do giving up a 5 figure sum that was sitting happily in your bank account.

michaels

GDB2222 wrote: »

So, your savings are earning the same as your mortgage rate? Where does the £1500 pa come in? Tax? Mind you, if you borrowed say £0.5m, you only need to be out by a fraction of a percent for the £1500 deficit to appear, such being the effects of gearing.

The 1500 loss is the average savings rate payable falling from 3% to 2.5%

It is less than 0.5m but similar order of magnitude.

GDB2222

michaels wrote: »

The 1500 loss is the average savings rate payable falling from 3% to 2.5%

It is less than 0.5m but similar order of magnitude.

There's not much point in being coy. Most people can multiply £1500 by 200, even if they can't divide £1500 by 0.5%.

I'm not sure why you are claiming that "You lose some, you lose some"? You appear to be covering the mortgage rate. You're just not gaining any more.