The 3 Big Mortgage Mistakes EVERYONE Makes (Real world examples)
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Published 2021-12-12
I want to ask that you keep an open mind whilst watching this video.
We all have pre-conditioned views of whether mortgages or debt are good or bad. But these views are often not our own. Instead, they’re typically formed early in life, often from our parents.
Perhaps your parents were big spenders and liked to live on the edge, with large mortgages, and you saw it blow up in their faces. Or, on the other hand, maybe they were big savers and paid off their mortgages as fast as they could, or never had them at all. Perhaps you've even had it drummed into you that all debt is bad.
We see the same thing with stock market investing or pensions. If someone we know has had a bad experience with them, we're likely to assume that they're bad. Or, on the other hand, if someone we know, or see online, has made a load of money betting on high-risk single stocks, we'll assume that’s a great way to make money.
And this is because we put a lot of weight on the stories we hear, from people we know.
But you need to look past these anecdotes and make your own decisions based on data.
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0:00 Intro
1:07 Mental Accounting
5:32 Investing Vs Overpaying Mortgage
9:25 High-Interest Rat
All Comments (21)
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Do you have any questions about mortgages? let me know below!
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I'm pretty sure that the number one mistake regarding a mortgage is getting married and obtaining one.
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The thing is.. Most people don't use extra money to invest - they just spend it rather than paying off their mortgage early
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I paid my mortgage off at age 39, like other comments, piece of mind is a huge factor (for me anyway). I am now in my early 50s, I find I don’t need to work if I don’t want to. I didn’t want to be forever paying debts off into my 70s. Just my debt averse view.
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Hey james, great video, well presented and clear, concise points. Gained a subscriber and look forward to more good content!
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Home prices will come down. Look at how much the monthly payment has gone up with the new mortgage rates. Add to that the recession and the fact that mortgage guidelines are getting more difficult. IMO home prices will need to fall by a minimum of 40% (more like 50%) before the market normalizes...
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You also have to consider the time to maturity on any mortgage. I did exactly what you outlined, paying off expensive BTL mortgage with a very cheap residential mortgage which was fully flexible, so that I kept under 65% LTV on my BTLs. But a residential mortgage, even a flexible one, has to be repaid at some point. Mine is due in 2025 so I am overpaying each month, but that's because it's an interest only mortgage and in 2025, I don't want to sell the residential property (hich is actually now a second home, my primary residence was purchased mortgage free).
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brillliant video, great to see those real world examples
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This is a great wisdom thanks for sharing. I could easily see myself stepping into this mess whilst unaware.
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Interesting video, especially a year on with everything that has happened. Currently inflation above 10% in the UK. Would be good to get your take on the same situation now.
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Informative as always 🙏
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Brilliant James.. just subscribed after watching a couple of your videos
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Well-explained and inspiring video!
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Here in Sweden we have this saying “Lagom”. Which means you do something in balance (kinda). Which I use when it comes to paying off and investing. You can’t avoid the interest rate expenses that are increased- and you should be at least do some adjustment to pay off a little more then usual. However do not forgot the opportunity to invest and get the bigger return in the long term. Aka do some of both. Ideally if you have taken too big loan, you should of course try to minimize the expenses. But of course don’t take huge risk in the beginning
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Thanks for some great content. Your section on High Interest rates slightly confused me: "The cost of borrowing money is not the interest rate you're being charged; it's the difference between the interest rate and inflation." - This only seems to make sense in the scenario where your salary is indexed to inflation. Where your salary is not keeping pace with inflation, then interest rates seem to be a pretty important factor. I might have misunderstood, and would welcome you explaining, please!
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Wow, how well explained was that! I can completely resonate with the mental accounting point and some similarities with your client example. This has really cleared it all up for me in terms of mortgage payments, interest/inflation and options if you have excess cash. Great job James!
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Oh how wrong the numbers were... one year later and I've just been offered a mortgage at 6.29% 😱
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Your channel is going to blow up. This is genuinely the best personal finance information I have seen on YouTube. Thanks for giving away so much value in your videos.
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Interesting bloke. Thanks for the info and taking the time to make the video. Will definitely subscribe.
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Thank you for this video. It’s very informative.
