Big Al, I'll add my voice to that borrowing can be positive. I dont agree with the 'pay your mortgage off' camp, historically mortgage debt is the cheapest finance the average man on the street will ever have available to him. If your even slightly risk adverse it makes sense to invest the money which will more oftern than not achieve a decent margin over the rate of interest on the mortgage.Similarly if youve no credit cards, take out a 0% card for cash purchases, max the card via general spending, make sure you set aside savings to repay the card when the 0% period ends. Result is a 0% loan you can invest for 13, maybe 15 months.
Big_G wrote (see)
This is a slightly different spin on this thread, but I just want to say that used correctly, debt/borrowing can be put to good use. I'm not talking about maxing out on credit cards for a fancy kitchen/TV/car/holiday, but using it 'appropriately'. When he was building his business, my FiL used the "borrow as much as you can for a long as you can" line. It doesn't sit quite right with me, but he is probably the wealthiest person I know. Maybe he got lucky, but I don't think that's the case. I think he borrowed money to turn it into something else and he's done okay out of it. He is not scared of debt at all...his main financial aim in life is to keep hold of his capital and borrow against it as appropriate.
This is a slightly different spin on this thread, but I just want to say that used correctly, debt/borrowing can be put to good use. I'm not talking about maxing out on credit cards for a fancy kitchen/TV/car/holiday, but using it 'appropriately'.
When he was building his business, my FiL used the "borrow as much as you can for a long as you can" line. It doesn't sit quite right with me, but he is probably the wealthiest person I know. Maybe he got lucky, but I don't think that's the case. I think he borrowed money to turn it into something else and he's done okay out of it. He is not scared of debt at all...his main financial aim in life is to keep hold of his capital and borrow against it as appropriate.
Buy to let landlord I presume
No I only own the house I live in.
I'm paying my mortgage off as fast as I can - I'd rather have the cash in my bank account each month.
I'm not borrowing money for anything else, and savings accounts (which I have a modest amount in) pay diddly-squat. I keep that money in an easy access account in case I need it for something in a hurry.
The sooner I can be mortgage-free, the better (and the more I pay off, the less interest I will pay in the long run)
Are buy-to-let landlords really the spawn of the devil? Not everyone wants to buy a home initially - who would they rent from if there were no landlords?
they arenot the spawn of the devil.............they are people who saw an oportunity that let cash in...and they were brave enoguh to do it.......
The fact that they can charge such high rents and then get a lot of it repaid by housing benefit dept does annoy me.........so a few are getting very rich from it........oonce agioan i do not blame them i blame the system that allowed it
because they are allowed to charge such rents its put the price of houses up so much that its almost impossibel for anyone to but a house.especially if you work on the old safe 3 times your income........
so now more people have to rent because they have no chance of buying........
so if they put a much lower maximum on rent benefit..........then they would not be able to pay more than the proper value for the house and the house prices wouyld reflect the wages of the area
The worst culprits are the ones like Wonga.com, Shopacheck, Provident Finance etc who prey on those at the bottom end of the financial ladder. Many of them may be uneducated and not bother to read the small print that might say 1500% apr, and even if they do, they might not necessarilly know what it means.
That's not meant to have a knock at the people who use them, but my point is that it's wrong that they can get away with charging these vulnerable people such silly rates.
Its not the Landlord that is the problem with Buy to let.
Back in 95/96 or thereabouts, the banks were bursting with cash and someone came up with the Buy To Let idea. Really it was Borrow to Let but splitting hairs.
At the time, the housing market was a bit flat so anything to get it moving.
The idea was sold as an investment. I objected at the time in writing on account of the ridiculous 'one on one' exploitative nature of this investment.
The idea was that one individual not risk averse would borrow money, buy a house with it and then rent it out to someone else at a rate that would not only pay the mortgage but over and above too. The property rises in value and the 'landlord' gets all the profit.
So really its the Landlords investment, but he gets someone else to pay for it. That's not investment, its pure exploitation.
I watched as a friend of mine went from being pleasant to being a sociopath as his housing empire grew. Tenants were just a means to an end.
And he knew even by 2000 that the rising prices would condemn whole rafts of people to have to rent since they couldn't afford to buy. Which made him really happy.
As for affordable property. The banks don't want affordable property. They have so much of their money tied up in overpriced property due to their lending habits that they'll do anything to keep the price high. So no new towns being built, why? the price of property will fall.
I bought my own place in 1993 and apparently its worth 5 times what I paid for it. I own the thing outright but I still find it unsettling that had I not bought when I did, I could now be having to fork out £1000 month in rent to someone who snapped up a mass of potential starter homes.
There's a social problem developing here. If someone does not have or is excluded from having a stake in society. Then why the hell would they respect its values?
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