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  • Property-a-holics

    Getting comfortable with mortgage debt?

    Hi guys,

    Just had a question, how do you guys deal with Mortgage debt. I am currently in a position where I have 2 properties but both are generating more than my mortgage repayments on a month to month basis.

    But i just can't get past the fact I have over £200k in debt over the two properties and may take over 10-15 years to get anywhere close to paying the properties of. Maybe this is my self education growing up where I would always try to be debt free, i.e paid of student loan asap, never had a credit card, paid of my first house in a few years.

    Just wondering how do people deal with debt, it seems to be a mental issue where it can sometimes cause anxietyeven though I am in a stable condition but would be great to hear other peoples experiences

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    Yes you need to get the mindset right to deal with the fear of debt. So work on it

    That`s because society tends by and large to be negative towards people who have debt

    So you have to fight the tide and educate yourself so you feel ok about it

    Like parachuting. Its unnatural to want to throw yourself out of a plane  but people do and they love it

    Many a budding property  entrepreneur though has never got going simply because they cant handle debt

    But there is of course a big difference between good debt and bad debt .

    Debt is good if you are borrowing  at 3% and making 10%

    That`s is what property investors do so dont worry you are ok with 200K debt

    If you make 7% by borrowing you logically want to borrow more not less

    Because the more money you borrow the richer you get

    Aim to acquire debt and grow your portfolio

    I never want to be and I suspect never will be debt free

    But I am financially free precisely because I am not debt free 

    Get your head around that one!

    If I was ever debt free I would  think I could have done better and that would be annoying

    To attempt to clear debt but for no reason other than its just  debt  - can be seen as a weakness I feel

    Confidence that debt is good is when the gap between mortgages and the value keeps growing

    Inflation erodes debt as well so that all helps too

    Equity is the  comfort blanket that keeps the debt night terrors at bay

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    Jonathan Clarke. http://www.buytoletmk.com

    You have to take on large sums of debt if you want to be successful in property. There is just no other way, except maybe if you had all the cash to buy outright but then you would probably find better investments!

    All my mortgages are interest only and I take comfort from the fact that as rents keep steadily going up my income keeps growing even if I do nothing. Prices are also rising slowly (and I’m in London), so I focus more on how much I’m actually making with the help of debt.

    I have a few ideas how to deal with with outstanding mortgage debt once they expire and I cannot remortgage any more, I’ll probably sell some to pay off the rest, maybe sell all,  but this is in the distant future.
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    Debt is fine. What you need to watch is your gearing. Stress test you portfolio against rate rises and price falls and hold enough cash to make sure you can handle down-turns. Btw this is the only debt you want - I agree all other debt I avoid like the plague!
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    It makes me laugh when I hear people say statements like;

    • 'yeah but you have a load of debt don't you, you don't own anything really'
    •  'I couldn't sleep at night with that much debt'
    • 'You will have a life of debt'

    These statements come from the basic education of life that 98% of people have and share. It isn't for me to be a life educator because they are already mentally closed down and they don't even know it.

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    Reminds me a of a good quote: "I try to avoid listening to the general consensus, because in general, far more people are unsuccessful than successful".

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    Between myself and my company I have almost £600k of debt. The company debt is personnally guaranteed.  This doesn't bother me as my rental properties are worth over £1 million.  Even if there was a crash on the scale of the one at the beginning of the 90s (30% drop) and I was forced to sell up I would still come out ahead - unlike the 90s crash when I went into negative equity on my first flat.

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    Hi Peter, do you find your choice of lenders is dramatically reduced with no job income?
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    It was for the first few years. It seemed to expand when I started using a company.

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    Hi

    I was similar to you when first started and it massively slowed me down and if I kept buying 20 years ago I would be retired and on a beach now. Debt I only class as debt, if you cant repay it if 30% of my properties are empty I can still pay the debt so never worry about it anymore and think its a good thing, without it you wont ever grow your business/investment. Also all properties I have I know I could sell next week to an investor or on market at a price that would clear mortgage and leave me with profit in bank

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