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18 hours ago, Cornishfarmer said:

will gold go up more than the interest you will pay?   probably not.    get mortgage paid then think again.     all very well people saying only paying 3% or so on money but thats what it is now the banks will always get their money somehow so if its not in interest so could add other charges in future.  

Gold has a long term record of 7% nominal appreciation, and many of us think that it is currently undervalued and would expect additional outperformance.

But this is not certain and not without risk, so it comes down again to the basics of investing - does the risk premium of a projected 4%+ outperformance outweight the risk? It depends on your current situation. Factors like your current LTV play a huge factor, but it is worth doing both, which is why I stack metals AND overpay the mortgage.

Edited by vand

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Mortgage rates have been at an all time low and are way below the average, they will rise at some point remember the rates  in the 80s and 90s ( look it up )

The best mortgage rates are achieved at LTV of 65%.

Gold can and have quite frequently in recent times.

Gambling with your house is never sensible you can't Guarantee your job these day heck some say all jobs will be fine by robots in twenty years (unlikely)

Even slightly overpaying mortgage can reduce interest paid considerably ( but never reduce the term that adds risk again)

Gold is easy to steal and fence  unless it's in a good safe or safe deposit box which increases costs.

Best bet over pay 10% buy a bit of gold.

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I think in general you should pay off debt first. 

 

But if you believe that you have a good low interst rate then you should pay that off slowly.  

 

So it's dependent on the rate your paying, how long it's fixed, and your overall investment portfolio

We're at all time low interest rates

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I'm a real estate investor... if you have low interst do not pay off your loan 

 

Use your money for other things.

 

It also depends how much you are LTV loan to value and if this is your primary vs second investment house etc

Usually I'd say if you are paying below 4.5% interest just leave it and pay it off amortized over as long a period as possible.

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9 hours ago, intelinside said:

I'm a real estate investor... if you have low interst do not pay off your loan 

 

Use your money for other things.

 

It also depends how much you are LTV loan to value and if this is your primary vs second investment house etc

Usually I'd say if you are paying below 4.5% interest just leave it and pay it off amortized over as long a period as possible.

And this is why I don’t trust real estate advice.      Get debt paid off as quick as possible 

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11 hours ago, Abyss said:

Happy days bought my new build house 2008 4 Bedroom detached house good size garden in culdesac and today paid off the mortgage and took 11 years and 1 month. Had 20% value property as a deposit when we purchased the house. I was IT contractor for 5 years and during this time frame I devoted 100% salary into paying off the mortgage and we lived off my wife salary. Harder proposition now as we have 2 year old son and I am no longer IT contractor but a permanent (lower paid) employee. Living life debt free something my late father instilled in me.

 

Fantastic! You have achieved in 11 years what most people take a working lifetime. You had a plan, you stuck to it, and from here will reap the rewards many times over, and now have the rest of your careers ahead of you to work towards financial freedom. 

 

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1 hour ago, vand said:

Fantastic! You have achieved in 11 years what most people take a working lifetime. You had a plan, you stuck to it, and from here will reap the rewards many times over, and now have the rest of your careers ahead of you to work towards financial freedom.

On reflection was difficult period of time financially. My wife earns just above minimum wage (factory worker) and as IT contractor I don't get paid for annual leave but earned a lot in overtime. Five years we did not go abroad to have a holiday and I worked every weekend/bank holiday and as did much overtime that was available. At the time I was driving an 7 year old Renault car while most of the neighbours had brand new cars on their driveway.

Now I have IT Managers job with a brand new company car every 3 years and a lot of flexibility to manage by own diary and ability to work from home which all equates to having much better work / personal life balance. Best part not having mortgage we can afford to send our son to a private school and provide a better quality of life than our parents were able to give us. If we lived in London with higher property prices I don't think paying off the mortgage in 11 years would have been possible unless we both had significantly higher paying salaries.

 

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7 hours ago, Cornishfarmer said:

And this is why I don’t trust real estate advice.      Get debt paid off as quick as possible 

Why would you pay off good debt. If it’s under 4% don’t pay it off

then use your money to invest in something making more than 4%   That’s what OP is asking. Basic Econ. opportunity cost of using money to pay off a mortgage vs using to buy another asset  

yes it’s diff when it’s ur own house  but the real answer is it depends on tons  how much does he make  does he have other investments doing better return then what his APR is...sheesh common sense just make most logical decision  he would know best

 

i have 2 million in debt. I also own 6.5 mill in real estate

what maters is your LTV

id your LTV is low you’re more than fine 

 

problem is ignorance and not applying things differently to different sutuetions

blanket statements like pay off all debt. Is what poor people and lower middle class think

  people see how they can use low debt 

rhats what I did last 9 years. I used low interest rates to buy real estate. Millions in real estate

as people were complaining about the FED printing money I just used 3-4% interest rates. Bought property at $1 mill that’s now worth 2mill  just learn  and use sound advice  do ur own research and execute  

its simple math  but depends on your situ

read a real estate book like Robert kiyosaki or gary Keller and see debt service and debt ratios

i own dozens of apartments doing this. Wasn’t easy lost some here and there. Failed. Got back up etc but it’s easy when you do your fifth or sixth RE deal...

 

thats why the true answer is that paying off debt depends

 

one more thing is if you think hyperinflation will occur then definitely do not pay off your mortgage cuz interest will go through roof 10-20% int rates. Hypotheticall.  y that money you owe will be nothing. And it would be better to have used that money for something better another asset. Do your own opportunity cost analysis

Edited by intelinside

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4 minutes ago, intelinside said:

Why would you pay off good debt. If it’s under 4% don’t pay it off

 

i have 2 million in debt. I also own 6.5 mill in real estate

what maters is your LTV

id your LTV is low you’re more than fine 

 

problem is ignorance and not applying things differently to different sutuetions

blanket statements like pay off all debt. Is what poor people and lower middle class think

  people see how they can use low debt 

rhats what I did last 9 years. I used low interest rates to buy real estate. Millions in real estate

as people were complaining about the FED printing money I just used 3-4% interest rates. Bought property at $1 mill that’s now worth 2mill  just learn  and use sound advice  do ur own research and execute  

its simple math

read a real estate book like Robert kiyosaki or gary Keller and see debt service and debt ratios

i own dozens of apartments doing this. Wasn’t easy lost some here and there. Failed. Got back up etc but it’s easy when you do your fifth or sixth RE deal...

What happening if proberty that was worth $1m now $2m goes to $0.5m.   Would it matter to you, probably not because company will go scat and the rest will have to absorb the debt.      If I can pay mortgage off at 3% quicker it’s better to me than spending the extra money of frivolous things then interest rates potentially exploding . Different outlooks neither right or wrong

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4 hours ago, intelinside said:

Why would you pay off good debt. If it’s under 4% don’t pay it off

Two reasons

 

1.  Mortgage debt is low now but Could you still pay your mortgage if interested rates go up to 7 , 10  or 15%

2.  Even if you did want to invest rather than  pay off the mortgage Gold is not the best investment and should only be a part of your portfolio and a relatively small part at that. 

 

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@intelinside as you yourself say, it depends on your personal situation.

That's why its called personal finance.

 

I agree that mortgage debt is very cheap at the moment and you can probably get better returns elsewhere, but then again most paper assets are richly valued right now so even that is far from guaranteed, and it also presupposes that the most important thing to your is earning the best achievable return. Strange as it may sounds, that is not necessarily the case. A risk adjusted return is far more important. 

Have you considered that having a fully paid off roof over your head provides you with the ability and cashflow to actually go out and aggressively buy stocks when the market is next in meltdown? Compare and contrast that to someone who took out a huge mortgage and then also put everything into the stock market hoping to just gain the long term return as a strategy for eventually paying down the mortgage. This is precisely the sort of "investor" who loses their bottle when the SHTF, dumps the stock portfolio and switches to worrying about his mortgage and makes the switch from investing to mortgage overpaying just at the wrong time. 
 

Edited by vand

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BTW, if you want to be logically consistent, those who say you should wholly invest rather than overpay the mortgage because of higher (expected) returns should also say never buy a home, as that would tie up your capital in a sub-optimal asset that could be earning more elsewhere.

 

 

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This year my plan is to put more into mortgage overpayments than silver/gold. I made a nice little stack over last couple of years and now our fixed rate deal ends in 2 years or so.

So I want to get that down now incase (when) the rates jump up, it's surprising how every £50 extra paid in saves approx £68 in interest over the term. Trying to get the term down so Im not working myself into an early grave :)

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23 hours ago, Cornishfarmer said:

What happening if proberty that was worth $1m now $2m goes to $0.5m.   Would it matter to you, probably not because company will go scat and the rest will have to absorb the debt.      If I can pay mortgage off at 3% quicker it’s better to me than spending the extra money of frivolous things then interest rates potentially exploding . Different outlooks neither right or wrong

I agree.  I just go with what's more probable and likely.  

personally i have properties fully paid off and others that have a million in debt at 3.8%

My return on most of the properties is 10-15%

if i can get 10-20% return from rents- expenses I'll continue paying off the 3.8%...and i'm not taking into consideration appreciation when I'm talking about my returns...

returns are related to rent.  if you think rents could go down 20-50% which I don't see happening 

you can look at your rent-to-buy ratio or similar, and compare whether it's worth it o pay off such low interst.

 

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5 hours ago, vand said:

@intelinside as you yourself say, it depends on your personal situation.

That's why its called personal finance.

 

I agree that mortgage debt is very cheap at the moment and you can probably get better returns elsewhere, but then again most paper assets are richly valued right now so even that is far from guaranteed, and it also presupposes that the most important thing to your is earning the best achievable return. Strange as it may sounds, that is not necessarily the case. A risk adjusted return is far more important. 

Have you considered that having a fully paid off roof over your head provides you with the ability and cashflow to actually go out and aggressively buy stocks when the market is next in meltdown? Compare and contrast that to someone who took out a huge mortgage and then also put everything into the stock market hoping to just gain the long term return as a strategy for eventually paying down the mortgage. This is precisely the sort of "investor" who loses their bottle when the SHTF, dumps the stock portfolio and switches to worrying about his mortgage and makes the switch from investing to mortgage overpaying just at the wrong time. 
 

Yeah depends on your risk tolerance and how likely you think we will have a meltdown... i don't think well have a meltdown but perhaps i'm an optimist or realist ;)

You're right it depends on his personal finance... psychology will play a huge weight on this probably more then the economics of it.  I am leaning towards the economics. Psychology is probably just as important for mental health tho0ugh lolz--and that has more play on Personal finace or self-control.  So it depends on discipline but also reaction during a SHFT

 

The part about SHTF that's why ou go for a low LTV loan-to-value ratio... it depends on that too.  does the OP have 90% loan on house or a 30% loan on house.  if SHTF does real estate go from $500k to $100k for a house... or more likely scenario of $500k to 400-kish.  To me theres a base where real estate will go during a downturn... just like ya'll have a base on what silver/gold could go down to.... at some point there will be many willing buyers

man this is fun but can make your mind go on loops

 

It's definitely a situational thing... don't take my advice or anyones as solid... it depends on your situation,  personal AND macro economics, and psychology! 

Edited by intelinside

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1 hour ago, intelinside said:

I agree.  I just go with what's more probable and likely.  

personally i have properties fully paid off and others that have a million in debt at 3.8%

My return on most of the properties is 10-15%

if i can get 10-20% return from rents- expenses I'll continue paying off the 3.8%...and i'm not taking into consideration appreciation when I'm talking about my returns...

returns are related to rent.  if you think rents could go down 20-50% which I don't see happening 

you can look at your rent-to-buy ratio or similar, and compare whether it's worth it o pay off such low interst.

 

Quite a different story in the UK.  The government has begun a tax assault on landlords and many are selling up in huge numbers.  House prices are too high, yields too low and the tax situation for landlords only likely to get worse.

Those that have very little to low leverage are not affected as much but any high leveraged new landlords to the UK marketplace now are taking a real risk.

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1 minute ago, Goldhooked said:

Quite a different story in the UK.  The government has begun a tax assault on landlords and many are selling up in huge numbers.  House prices are too high, yields too low and the tax situation for landlords only likely to get worse.

Those that have very little to low leverage are not affected as much but any high leveraged new landlords to the UK marketplace now are taking a real risk.

I see well hope they can fight that it sounds like you guys are over taxed on PMs and the gov is headed towards socialism! ;)

 

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@intelinside the U.K. and US are quite different.    A member here was looking into a house in North Dakota I think that costs pea nuts, not sure if he took it any further.           I love the states and spent a cracking 6 months there, where about are you? Do you buy houses in your area or is it possible to do from a different state? Do you go for top end property’s, or a mix?

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6 minutes ago, Cornishfarmer said:

@intelinside the U.K. and US are quite different.    A member here was looking into a house in North Dakota I think that costs pea nuts, not sure if he took it any further.           I love the states and spent a cracking 6 months there, where about are you? Do you buy houses in your area or is it possible to do from a different state? Do you go for top end property’s, or a mix?

I mix it up.  Most is in California near the beach (i consider prime real estate like having blue chip stocks in stock market)

Then we buy some inland (like having mid-smaller)

And we buy some out of state which are all differnt markets.

Every market different.  You can get houses for $30-80k in detroit depending on location and condition.  And you can get houses for $600k-$1.5m in california.  So just like silver/gold we have lots of differnt grades, (locations) etc it's pretty diverse. Best thing I feel is to know your own market (wher you live or 25 miles outside of it or around it) then you know it so well that when you see an opportunity in 1 month to 5 years you hop on that opportunity....

Then you diversify once you have your base around you (just like stackers try to stack their base first maybe brittanias, 10 oz generics for value then later expand to collectables etc) 

Just my opinion

 

edit also note.... i would not start with out of state real estate if you do buy or out of your local area ...just like most stackers wouldn't recommend getting into special MS grad coins it's kind of difficult and risk (ier cuz all investing is some what risky)

Edited by intelinside

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2 hours ago, intelinside said:

I see well hope they can fight that it sounds like you guys are over taxed on PMs and the gov is headed towards socialism! ;)

 

There’s no fighting it, it’s already well under way and has the support of the wider population (it has the ability to win votes politically).  Some of the crazy high leveraged landlords tried (a rather amusing campaign of lots of angry letter writing and badly designed billboards) and it got nowhere.  Landlords and estate/letting agents (real estate agents in your language ;)) are generally not very popular in the UK!

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I read your opening post, didnt read the next few pages. : _ )

 

we all have our own ideas on how things work.
I am a similar age to yourself, and similar situation. to cover my mindset in an absolute nutshell

- morgage rates are so low, that even cash savings accounts have a higher rate of interest
- i ran some calculators comparing overpaying vs 'saving' in an average rate of return in a stock tracker, and realised that for similar invested, an investment would pay the morgage for me.
- as such, i now have a couple of passive income streams that pay for my mortgage, so when my is due its 2 yearly renewals, i take out a small amount to cover home improvements.
- my investment  in gold and silver was a diversification again negative stok (and ultimately, house price!) movements. q
- due to house price increases, my next re-morg will probably be used to get a buy to let (i am aware of tax rules).


i guess the best thing you can do is get some ideas, and then run some math. thats what  i have done, and whether i am riight or wrong in my choices, at least i can say i have gone in eyes open and i understand my why and why nots.
My little post here is masively thin, so someone will read and find more holes than substance. but thats fine. brainstorm. :)
 

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