Mortgage lending up to record levels as property buyers scramble
to beat June Stamp Duty deadline
Mortgage lending reached £11 billion in March – the highest
since records began in 1993 - as a result of the mad rush to beat the stamp
duty holiday, which ends in June.
The Bank of England reported that there were 80,000 mortgage
approvals in March, up from 73,000 from the previous year, buy slightly down on
February’s figure.
Although the property market has boomed in the last few
months, there are signs that some areas are slowing down. I’m seeing a lot of
London prices fall sharply, as Estate Agent send me emails every day offering
price reductions of up to £50,000 or around 10% of the asking price.
We have almost reached the point where it would be extremely
difficult to buy and complete with a mortgage purchase before the end of June
if you have not started the legal process already.
Another word for mortgage is ‘debt’. We have seen debt
spiralling all over the world as government’s borrow or print trillions of
dollars to prevent the economy from going into recession.
Whilst people in work are paying down credit card debt, there
are signs that thousands of people are getting deeper debt, according to UK debt
advice charity Step Change.
Sometimes this can be as a result of a catastrophic change,
like a job loss or divorce. In other cases, it’s purely down to mismanagement
of money.
Debts can creep up on you like a disease and before you know
it’s too late and you are in too deep.
If this happens to you, take professional advice and do not
bury your head in the sand hoping it will all go away. It won’t! In the UK, you
can talk to charities such as citizens
advice and Step Change
Once you talk to recognise charity, interest and penalty charges
on your debts, as well as legal action, can be frozen for 60 days. This gives
you breathing space and a chance to put together an informal debt repayment plan.
I was clearing out some of my old files for shredding yesterday
from my financial advisor business. I came across several clients who reminded
me of the importance of saving and investing.
One particular client first sought my advice 20 years ago
when she had been through a lot of financial problems. To cut a long story
short, we put a plan together and I arranged a mortgage for her to buy a second
property by re-mortgaging her residential home.
At the time, houses were cheap and you could buy a three-bedroom
property just outside London for around £80,000.
She had absolutely no money and I remember listing her non-property
assets on my fact-find form as “£200” in the bank, and that was it. However,
she some equity in her property, a mortgage and some consumer debt.
She used that equity to fund a deposit for a second property
and a couple of years later did the same thing again.
She continued repeating this process over the following 20
years.
As I said, she started with £200 in the bank. In fact, she
had several other personal debts so was actually in the red.
When she unfortunately passed away last year in her late
50’s her estate was worth around £1 million.
Not bad for someone who started with £200 in the bank.
Almost all of her wealth was due to her buying properties
and holding them. Don’t forget that she was holding his properties during the
2008 financial crash, but they bounced back.
She never bothered very much with Pensions or the stock
market because she said she did not understand them and prefer to invest in
something she did understand like property.
3 Key Takeaways
1.
She did start taking money seriously and stopped
using expensive consumer credit to buy consumer products which went down in
value. Instead, she borrowed cheaply to buy assets which went up in value and
put money in her pocket.
2.
She built her wealth using other people’s money.
Could she have saved £1 million in her lifetime from after-tax income? No way. In
Robert Kiyosaki‘s classic bestselling book, Rich Dad Poor Dad, his rich dad asked
Robert, “how long would it take to earn $1 million?”. He then asked “how long
would it take to borrow a million dollars and invest it to make more money?”
3.
She bought and held for the long term, despite
the 2008 downturn.
You can learn to do the same thing.
I’ve seen countless examples of people building wealth over
time through investing wisely and patiently. Some in property, others in
business or the stock market. The principles and skills are the same and are learnable
by anyone who makes the effort.
I’m giving away 3 free coaching calls sessions to anyone who
is prepared to take the time and effort to learn and master money. Look out for
the link in the next 48 hours on my Charles Kelly Marketing Facebook page https://www.facebook.com/CharlesKellyMarketer
