Archive for October, 2019

Why remortgaging is a good investment strategy

Do you know that around a third of all home loans made in the UK are actually remortgages? Yes, they are. So…

What is remortgaging?

A remortgage is where you take out a new mortgage on a property you already own – either to replace your existing mortgage or to borrow money against your property.

Also known as refinancing in the United States, it is the process of paying off one mortgage with the proceeds from a new mortgage using the same property as security.

In the United Kingdom, the majority of remortgage rates track the Bank of England base rate which has been at a historic low of 0.5% since March 2009. 

A base rate is the interest rate set by the Bank of England for lending to other banks, used as the benchmark for interest rates generally

Now, that we are clear about what remortgaging is, the truth is that it isn’t right for everybody.

Who is it good for?

For instance, remortgaging is good for you if your home’s value has risen high since you took out your mortgage. This may put you in a lower loan-to-value band, and therefore make you eligible for much lower rates. 

Another situation that is good for remortgaging is if you’re worried about interest rates going up. Although you need to fact check your rates so that you do not just put yourself in panic mode. However, if it’s the Bank of England base rate that is predicted to go up, this may affect your mortgage payments directly, depending on the type of mortgage you have. 

Also if your current deal is about to end, remortgaging might be a good investment strategy to get on. Nevertheless, there are some reasons to choose to remortgage.

Remortgaging can help you borrow more.

If your current lender says no to lending you more money or the terms it’s offering aren’t very suitable, remortgaging to a new lender might enable you to raise money cheaply on low rates. Just remember to take all the fees into account to consider if it’s really worth it.

The most commonly accepted reasons to raise money are for home improvements and paying off other debts. However, be prepared for your lender to ask for evidence if you are borrowing a large amount, e.g. builder quotes, or proof that you have paid off the debts.

When you don’t need to remortgage

Stop rolling with the crowd on every strategy you hear is good, instead, make sure to be sure it’s the best for you. In the case of remortgaging, don’t do it if you’re already on a great interest rate because it is possible that you may already have the best deal in town. Again, it gets down to taking the time to cross-check and compare. 

In addition, when your mortgage debt has fallen below a certain amount – say around £50,000 – it may not be worth switching lenders, simply because you are less likely to make a saving if the fees are high. In fact, some lenders won’t even take on mortgages below £25,000.

The smaller your mortgage, the worse the effect of any fees you need to pay. Quite often, in this case, you’ll be better remaining on the higher interest rate.

Also, when your early repayment charge is large.

A large early repayment charge could mean that it’d be utter foolishness to move before the end of the incentive period. Do your calculations right to find out If it would cost too much to free yourself from your current deal. Whatever you discover will help you make the right decisions for your progress.  

Conclusion

Buying a house is awesome, and buying more than with this remortgaging strategy is great. But one thing is critical to achieving this, and that is being creditworthy and getting expert advice. Experts have experience doing these things and they can shorten the learning curve. 

Do you want to know more about remortgaging and how to be creditworthy for success in property investing? Check my calendar here to book a free 30 mins one-on-one call with me now

To your success!

 

 

 

Two-science backed lessons on perfect timing

Do you know that simply knowing how to accomplish your goal isn’t sufficient for achieving top performance?

Well, it isn’t. And that’s according to new research that revealed another critical factor that often goes overlooked when considering how to achieve our desired results: timing. 

“In his book, When: The Scientific Principles of Perfect Timing, Dan Pink synthesizes cutting-edge research into a compelling narrative that highlights the power of leveraging timing to amplify performance. 

On a day-to-day basis, we face a never-ending stream of “when” decisions – when to change jobs, when to buy a house, when to exercise or even, when to end a relationship. Most people make these decisions by relying on unsubstantiated systems like intuition or guesswork. Worse, most tasks are scheduled based on nothing more than our availability; we give minimal thought to the kind of task we’re doing and how timing might affect our performance, and instead pencil in our to-dos whenever our schedule allows. In so doing, we are undoubtedly leaving peak performance on the table.”

Timing is everything, and it will always be a crucial part of our lives. So, here are two lessons from Dan Pink’s book that will guide you in making better when-to decisions: 

Lesson 1: Honor your chronotype 

Everyone has a chronotype, that is, a person’s natural inclination about the times of day when they prefer to sleep or when they are most alert or energetic.

Knowing your chronotype is key to understanding how you experience the day and when you are most active at various tasks. 

Each day is divided into three experiential stages: a peak, a trough, and a rebound. Larks and third birds experience the day in precisely that order, while owls experience the reverse. Use the research-backed chart below to determine better when to take different types of action:

To determine your chronotype, take the Munich Chronotype Questionnaire at https://www.danpink.com/mctq.

Lesson 2: Use Restorative Breaks to Boost Your Performance

Something happens during the trough, roughly seven hours after waking, that makes it far more perilous than any other time of day. For example:

  • Sleep-related vehicle accidents peak twice a day: between 2 a.m. and 6 a.m. (middle of the night, makes sense) and between 2 p.m. and 4 p.m. (middle of the afternoon, hello trough!).
  • Taking a test in the afternoon without a break produces scores that are equivalent to spending less time in school each year, and having parents with lower incomes and less education.

Becoming more aware of the trough is an essential first step in learning to avoid making poor decisions due to bad timing. 

Research shows that the best way to combat the dangers of the trough is by taking restorative breaks. While there’s no single answer on precisely what those breaks should look like, Pink says science offers five guiding principles:

  1. Something beats nothing: Even short breaks from a task can help us maintain focus and reactivate our commitment to a goal if our motivation is waning. 
  2. Moving beats stationary: “Microbursts of activity” like hourly 5-minute walks have been shown to boost energy, sharpen focus, increase concentration, enhance creativity and improve mood. 
  3. Social beats solo: It is believed that spending time alone can recharge us, but much of the research points toward the higher power of being with others, particularly when we’re free to choose with whom we spend time. 
  4. Outside beats inside: Although people can recognize they’d be happier taking a break outside, they underestimate how much happier being close to trees, plants, rivers, etc. is a powerful restorative and allows people to return to their tasks in a better mood (Nizbet and Zelenski, 2011).
  5. Fully detached beats semi-detached: Resist the urge to multitask. Step away from all work-related material and engage in something completely different (all of those office ping pong tables are starting to make sense—they’re social, active, and fully detached!)

We spend countless hours researching and strategizing about how to tackle our daily tasks, but so rarely do we strongly consider when we tackle our tasks. When we fail to use timing to our advantage, we short-change ourselves and limit our potential.