January 23, 2009
Property Investment - Waiting Game Or Lucky Bugger?
Call me wise, call me clever or more probably just call me a lucky bugger.
I'm holding my hand up high as one of the smug property investors who managed to secure a tracker mortgage of nearly 1% below base rate. Ok its only on a couple of my properties but hey what the hell!
OK, this won't last forever, but I have about another 18 months to go before the 2 year tracker deal comes to an end. But wow it feels really good!
The art of property investment is trying to predict the highs and lows in the markets (both in property prices and mortgage rates)
If investing in property were a science, you would fix when rates are low and about to rise, and take on tracker mortgages when rates were about to fall. The problem at the moment is that the greedy banks ( I was going to swear here but thought better of it :)) are adding HUGE fees to both fixed and tracker mortgages. A typical example is a 1 year fixed rate deal from The Mortgage Works at 3.49% which requires a 3.5% fee. Assuming you were to borrow say £100,000, this would equate to an additional £291 per month. The rate in effect is 6.49%.
So why would we chose such a mortgage product? The main reason is the fee, in most cases can be added to the loan, but when taking into account the cost of a valuation and solictors cost involved in remortgaging this would at least add another 1% cost to the project.
TOP TIP : Don't get wooed by headline figures - do the Maths!!
