Cheers Big (and everyone else).
I am actually very conservative, which is partly why I asked the question about borrowing big, simply because, after 15 years of being conservative in investing in property, its not really got me anywhere, except that I basically debt free with the rest invested in stocks (public and private). I am not saying that being debt free and owning a home is not a great situation to be in, however, simply that to date, my friends and others have done far better by taking on much, much more risk to invest in property, and after 2007 I finally thought that perhaps my view on things would come true, as we all know, property has not only, not fallen, its jumped much much higher. Even in the U.S which bore the brunt of the GFC, many area's are now above their pre GFC prices... Arggggggg. ha. Sure, I am jealous of those I know who have seen their asset prices increase dramatically compared to my humble house growth. I know it cannot go on forever, and yet, if as some of you have agreed on, governments seem hell bent on supporting those who take on debt.
I don't really fear inflation, because again, it will benefit those with debt.... I have a very secure job, perhaps not highly paid, but... it will allow me to take care of my family for as long as I can get out of bed. Now, an asset crash, again, it will be most likely across the board, so if I lose, everyone does, which means I will likely be a beneficiary of ultra low interest rates, government support etc... So I get to live where I want, pay perhaps less than a renter, have security of ownership and benefit from any price rises.
Above all, I am interested in those arguing against and in support of my views. As I am really trying to think through such a big decision (i.e. Take on a much bigger loan, with my eyes open to the risks and mitigate them as best as possible).
With a good home loan rate now sitting at 3.99% (I have pre approval from a couple of solid institutions). I am leaning towards buying big, because I struggle to argue against it.
Thoughts?
@acorn - Agree with your thoughts, which worries me, as I really don't want to change my conservative way of life... but my family comes first and its getting bigger. ha.
@hawkers - Glad you like the thread. What sort of parameters would you define as being 'over leveraged'?
@antistar - Appreciate the post. I believe I am fairly balanced with my asset allocations, however, again, my question is perhaps more asking, is taking on more leverage in the current environment actually risky, when... all 'arrows' point towards risk being 'ok' even if the Government says otherwise, because its what they actually do that counts, and why they heavily supported the major banks with their liquidity issues back in 2008... I get the feeling they can and will do a lot more if they have to...
@pintohoo - YES.... at least from my perspective we are. So now that is cleared up, I would appreciate any thoughts on you have on my question/s?
btw - I found a similar homeloan to my friends one (but as I have not seen her in a while, I have to exact details, I got the impression her loan was longer dated) I was talking about (still very jealous, I mean, I would be borrowing like crazy and buying utilities with good dividends and just watch inflation reduce the loan whilst making me rich.... I would have no hesitation in being more risky in the U.K. Their government is happy to print money to survive).
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btw - yes the subsequent rate is high, but.. then you just refinance and do it all again (that is again, what my friend told me she planned to do).
