InternationalRockSuperstar Posted November 16, 2007 Share Posted November 16, 2007 I've got a still got a student loan of 20k. I could pay it all off today if I wanted to but there's no point. The Student Loan Company only charges 4.x% interest, whereas I can get 6.x% in a risk free Cash ISA with NS&I. Free money as far as I'm concerned. A 2% spread on £20k nets me about £400 a year for doing f*ck all! (tax free too!). Back of the net. Quote Link to comment Share on other sites More sharing options...
Guest An Bearin Bui Posted November 16, 2007 Share Posted November 16, 2007 The point about debt is that it remains static whereas rents grow over time. dogbox: can you explain how debt remains static and rents grow over time? I'd be interested to know because it's common knowledge that debt grows with compound interest (that's why you're better off buying a house cash down than buying it with a mortgage) and rents tend to be stable as they are very price-sensitive and closely linked to real earnings (no-one borrows to pay the rent). That's why they've been more or less static for the last 5 years because wages have been too. In Germany, for example, there are also rent controls so tenants are protected by law from any rent rises or eviction which serves to keep rents even more static than they are in the UK. Quote Link to comment Share on other sites More sharing options...
Badhairday Posted November 16, 2007 Share Posted November 16, 2007 The point about debt is that it remains static whereas rents grow over time. dogbox: can you explain how debt remains static and rents grow over time? I'd be interested to know because it's common knowledge that debt grows with compound interest (that's why you're better off buying a house cash down than buying it with a mortgage) and rents tend to be stable as they are very price-sensitive and closely linked to real earnings (no-one borrows to pay the rent). That's why they've been more or less static for the last 5 years because wages have been too. In Germany, for example, there are also rent controls so tenants are protected by law from any rent rises or eviction which serves to keep rents even more static than they are in the UK. Rents have not grown much recently cos of the low wage inflation of the past few years. Once wage inflation picks up rents will go up too. I suspect rents have their own cycles, just like property prices do, so the past few years are not necessarily an indicator of the future. I have noticed a substantial increase in rents lately. I remember someone telling me once that rents react in the opposite way to increased interest rates, than houses do. So, if house prices fall, rents usually go up. I cant confirm or deny that as I have been too lazy to do any research on that. As for the loan itself I do believe in inflationary times a loan (with a fixed interest rate) is a great investment. With your own home it makes sense to pay off your mortgage, but with a BTL, a mortgage makes much better financial sense 'cos you can offset the costs of servicing the mortgage to reduce your tax. Quote Link to comment Share on other sites More sharing options...
Doom Lord Posted November 16, 2007 Share Posted November 16, 2007 I have a One account mortgage with all my cash savings in said account. This means I am effectivley getting tax free 6.9% on my savings. I have a sainsburys credit card that I buy all my shopping with which attracts 0 % interest for the first year. This means that all the money I would spend on shopping in a year is still sat in my bank account offsetting my mortage. I buy everything else with a credit cards on interest free deals and keep moving them around when the deal is up. Although there are charges (and it's getting harder) it's still cheaper than my mortgate rate. All this time the extra money is offsetting my mortgage saving me even more money. I also take advantage of any interest free credit (Loan Companies) on any other large Item I buy and pay them all back before the deal runs out again this offsets againts my mortgage. I am saving a lot of money by doing this. Also because I am overpaying into my mortgage buy doing this, If I lost my job (Contractor) in a downturn I wouldn't have to make any mortage payments for a long time. Also because I don't have any savings as they are infact debt in my mortgage then the 9 month wait for mortage relief benfit starts ticking from the day I am unemployed. Credit can be good if used wisely Quote Link to comment Share on other sites More sharing options...
steve99 Posted November 16, 2007 Share Posted November 16, 2007 Steve, what is a semi flexible buinsess? Dont know as I havent found it yet However its either something that can be stopped and started a couple of times a year or something that is portable without loosing too much buisness. Quote Link to comment Share on other sites More sharing options...
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