Do you think taking out a mortgage this year is a good idea?

In particular when considering buying real estate in London (flats, houses....).

Interested to hear what London dwellers think about the property market in the UK + UK public finances + UK growth prospects coupled with the prospects of a career in finance on this lovely island...

 

Located in the UK, would get it there since i have credit history there.. i actually have a friend who is making $$ in the US with foreclosures but i cannot get any funds there since i have no CR...

so rates here depend but i could get something in the lines of 3.5% fixed 2 years and then a tracker...

i guess always a doubt re London real estate bubble...

 
IlliniProgrammer:
Get it fixed for ten years. And make it non-recourse if you can. It's worth paying an extra 50 basis points to be able to walk away and wash your hands of it.
unfortunately UK doesn't have non recourse debt..

i guess the main question is what does one think about the real estate market in London, and whether to get a tracker mortgage or fixed+plus banks variable afterwards...

 

Definitely pay the premium for a fixed mortgage if you can afford it- or at least get a favorable interest rate cap.

When inflation starts to tick up, it's going to go up fast- and it's going to hit the rates market. The Bank of England is going to raise rates, and if you're in a fixed mortgage, you're looking at a ~ 1000/month payment on a 200K loan go up to 2000 if rates go from 3% up to 9%.

In the US, 15-year mortgages are ridiculously cheap. For those with good credit, you're looking at 3% for 15-year fixed, 3.8-4% for a 30-year fixed. At those rates, why would you ever get an ARM?

 

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