Interest only - crazy!

Рет қаралды 4,444

2 ай бұрын

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Пікірлер: 7

@rudra7615 2 ай бұрын

I’ll explain it better as this is what worked for me. House prices will increase, your grandfather probably paid £500 for a house, at that time £500 was so much, but today… say I told you there is a mortgage of £500. You can easily pay it off or remortgage and easily pay it off and take profit. Same idea. Your grandfather paying interest only mortgage on £500 is fine, cause the moment you sell, you will make more. So get a house for £200k, interest only and when you rent, save as much as you can from the profit for another house. In 10-15 years that 200k house is now 350-450k. You can sell, pay off the 200k and still walk away with profit if you choose to. And you have more properties at hand

@nexuscamps6089 2 ай бұрын

Another point to add to this is that in 10/20 years time that mortgage/debt will effectively be worth less due to inflation.

@alastairc.5219 2 ай бұрын

Not if you include the interest amount paid annually in conjunction with the loan amount.

@nexuscamps6089 2 ай бұрын

@alastairc.5219 please elaborate? £250,000 today is not worth the same amount in 10 years. Interest is a mute point here because the people adopting this model are getting the tenants to pay that fee, meaning that over time, the debt you took out is worth less because of inflation eroding the debts value.

@alastairc.5219 2 ай бұрын

@nexuscamps6089 sure the loan amount devalues over time by CPI/inflation, but your counter is the interest paid. Tenants will come and go, cash flow will rise and fall depending on property expenses and income will vary meaning the interest payment is not guaranteed to be met by the tenant. That aside, the value of the original loan amount reduces by inflation, while the value of interest already paid increases at the same rate.

@nexuscamps6089 2 ай бұрын

@alastairc.5219 For the last 4 years, we have made sure there are zero voids for our properties, and all interest has been paid by the tenants. Again, my point was that debt gets eroded by inflation, not what happens with tenants, maintenance costs etc, those adjustments should be factored in when making sure the investment is going to be profitable and more importantly sustainable in the long term.

@alijack 26 күн бұрын

@@alastairc.5219if you are not covering interest payments then you are in the wrong business.