0:02

Hi.

0:02

I'm Rob, and I'm Rob. And this is

0:04

Ask Robin Rob.

0:07

Hello, everyone, and welcome to Ask Robin

0:09

Rob, the show where you get your questions to,

0:11

and we give you our best efforts at an

0:13

answer, and that format's been running for a

0:15

lot of episodes now. That's a popular

0:17

one. So let's continue that roadshow

0:20

and remind you how you can get involved

0:22

and get your very own question

0:24

answered. Yep. Oh, so simple. Give us

0:26

a call on 013808 triple

0:28

035 or go to property

0:30

help dot net slash ask. Just

0:32

come up with your question, send it over, and

0:34

you'll soon have your answer.

0:37

Hi,

0:37

Robin Rob. My name is Sam, and I'm calling

0:39

from London. I have question about getting

0:41

a mortgage, and I would like your opinion on

0:43

how long to fix for given the current situation

0:45

with inflation. Is it best to fix for

0:47

as long as possible given inflation only

0:49

seems to be getting higher and higher or would re

0:51

marketing again in two years be a better

0:53

idea if the current environment

0:55

has calmed? Thanks for your help. Bye.

0:57

Hey, Sam. Thank you for your question. And

0:59

so many people are asking this right now.

1:02

What should I do about mortgages?

1:04

Whether you're refinancing or taking mortgage

1:06

out for the first time. So let's help

1:08

you and hopefully lots of other

1:10

people. So the first

1:12

thing to say is it hard to give you an exact

1:15

answer because it's gonna depend on your situation.

1:17

However, I want to help. So let's just take a general

1:20

situation, which is you

1:22

wanting to get a mortgage today, you don't care about

1:25

the rest, and you wanna get the best deal possible.

1:27

Well, if that's the case, I

1:29

can tell you what I would do. Because I wanna

1:32

be careful here. What I would do

1:35

is based on the information that I have.

1:37

I don't have a crystal ball and I

1:39

might be wrong. But if it gives

1:41

you comfort by knowing what someone else is

1:43

doing, then I'm willing to share what I thought.

1:46

because I am going through this process at the moment

1:48

with refinancing and also looking to

1:50

make investments. And the answer is,

1:53

I would go for a two year fix rather than

1:56

say five year fix. Let me

1:58

explain why. The reason

1:59

I would do that is the margins

2:02

are really high right now. The

2:04

amount that the

2:05

lenders borrow at and the

2:07

amount they put in as a margin, their profit

2:10

on top of that amount is really

2:12

high and it's the highest it's been in years.

2:14

So they're making really big margins

2:17

right now. And for me, I think there's two key

2:19

reasons why they're doing that. One, there's the

2:21

market uncertainty and what the future holds.

2:23

But two, and I actually think this is the main

2:25

reason. is they can get away with it because of

2:28

that uncertainty. So they're making a lot

2:30

of money. Now up until recently,

2:32

the margins the long term trend

2:34

was they were coming down and we were and better and

2:36

better products. I think in a

2:38

couple of years' time, this

2:40

would have all sorted itself out

2:43

and the margins will come back down

2:45

again Now interest rates might be higher in a couple

2:47

of years, but I think even with interest

2:49

rates being higher, I think the margins will be

2:51

lower therefore I don't think

2:53

I'll be any worse off in a couple of years when refinance

2:56

and might be a bit better off.

2:58

So that's

2:59

what I would do. and you understand

3:01

why I'm doing that. I'm based on that information,

3:04

Sam, and everyone else, you can now decide

3:06

on what you want to do. But if you are

3:08

one of those people who wanna sleep at night

3:10

or you don't like admin, then go

3:13

for a five year. A five year might be a

3:15

better option. But if you're

3:17

willing to take a little bit of a risk

3:19

and you're not gonna lose sleep at night, then

3:21

go for the two year like I am. But

3:23

the

3:23

decision is ultimately yours and you can't

3:25

come and find me if I'm wrong. Great answer, Rob.

3:28

Let's move on to our next question. This one

3:30

is from Tom. Hi, Rob and

3:32

Rob. Thanks so much for continuing

3:34

to produce some really insightful podcasts

3:37

I've listened to every week, and it really helped me

3:39

to start my journey and profit investment

3:41

and also to roll for releasing the young

3:43

new book to collect some money. It's got some

3:45

really, really interesting insights in there.

3:48

And my question today is she has been

3:49

inspired

3:50

by reading that book. And what I want

3:52

to ask your advice on is whether

3:54

you think it's a good idea to actually

3:57

take out an interest only

3:59

mortgage on your own

4:02

property that you live in. with the idea

4:04

of saving the difference in

4:07

the lower cost of the interest earning mortgage versus

4:10

repayment. mortgage. So,

4:12

say, for example, that's five hundred pounds cheaper

4:14

per month. If you actually save that money into

4:17

pot and over time, build up a deposit

4:19

that you then invest into a buy seller. property,

4:22

would you recommend that that is a suitable,

4:24

sensible approach to help you build funds

4:27

and invest in the long term?

4:29

given

4:29

what I've read in your book, it it sounds like sensible

4:32

approach given you're obviously going

4:34

to use the power of inflation

4:36

over time to erode your your debt on

4:38

your own property whilst also

4:40

leveraging your money to

4:42

invest in other properties over the

4:44

long term, which are also giving

4:46

you rental income that increases

4:49

with inflation over time and capital

4:51

appreciation of those properties. So,

4:53

yeah, that'd be great to get your advice and

4:55

feedback on whether that's a sensible approach.

4:57

Tom, thank you for the question, and thank you for reading the

4:59

book. So is it a good idea to take out

5:01

an interest only mortgage on your own property

5:04

that you live in? Well, we'll get to

5:06

whether it's a good idea. But the first thing that

5:08

will say is that it's not easy to

5:10

get interest only mortgages on your own home.

5:12

I believe it's possible there are some

5:15

products out there that you can qualify for

5:17

in some circumstances, but they're

5:19

pretty few and far between. It used

5:21

to be far more of a thing before two thousand

5:23

and eight, having interest only on your own home

5:26

was a lot easier than it is now.

5:28

If you do wanna go down this route, you're gonna again

5:30

have to speak to mortgage broker and dig around

5:32

little bit and see if you can find something suitable.

5:35

Beginning to whether it's a good idea, it

5:37

very much can be for many people though

5:39

it won't be. So most people,

5:42

as you'll know, will take out a repayment mortgage

5:44

on their own home. and their objective will

5:46

be to pay off that mortgage as soon as they

5:48

can so they can own their property outright.

5:51

This works for most people most of the time.

5:53

because part of your repayment is going

5:55

to pay down the balance every month automatically.

5:58

There's nothing you can do about it. It happens

5:59

whether you like it or not. And for

6:02

many people, that's a really good thing because it

6:04

means you don't have to worry about having their

6:06

discipline to actually save that money.

6:08

If you had five hundred pounds going towards cap

6:10

as in your example. There's no

6:13

risk around Christmas. You can go well. We've

6:15

really done to give you some nice presents for the kids this

6:17

year. So actually, let's only pay off two hundred pounds

6:19

of the mortgage. So it's effectively forced

6:21

savings. But for many people, that's a

6:23

benefit. And then, of course, most people

6:25

like the idea of the security of owning

6:27

their own home outright because then whatever

6:30

happens to them if they lose their job or whatever,

6:32

there's no risk and they're always gonna have somewhere

6:34

to live and people often are also focused

6:36

on passing us on to their kids. So it's

6:38

what most people do because it works for

6:41

most people, but it's not the

6:43

only way and there is no reason why

6:45

what you've said wouldn't work. You

6:47

could argue that if you've got the discipline to definitely

6:49

do those savings and you're in

6:51

a secure financial position, it could

6:53

actually make more sense. because rather than

6:55

eventually owning hundred percent of

6:58

your own home, you could, in the future,

7:00

own thirty percent of your own home,

7:02

plus thirty percent of a couple of other

7:04

properties. which gives you more diversification, more

7:06

exposure to capital growth, more opportunity to

7:09

sell one of those properties and shift into different

7:11

asset class, and you've got those properties

7:13

actually producing income for you

7:15

rather than just equity in your home, which

7:17

you can't really do anything with. basically,

7:19

Tom, what you've said is completely sound.

7:22

It's just most people won't do it, either

7:24

because it's actually not right for them or because

7:26

they're afraid of taking that approach. It's a bit too

7:28

far outside the norm, or they won't

7:30

be able to find an interest only product.

7:33

But if you can find a product and it does

7:35

still seem like a good idea after thinking through everything

7:37

I just talked about, then it could be something worth

7:39

thinking about. So thank you for your questions

7:41

and thank you for listening. We'll be back on

7:43

Thursday with property podcast, and of course,

7:45

back next week with Ask Rob and

7:47

Rob.

7:48

So until then, take care. Have fun.

7:50

Bye bye. Bye bye.