29-06-2012, 08:25 AM
(29-06-2012, 12:08 AM)Musicwhiz Wrote: I just find it unnerving that mortgage loans take up such a large proportion of loans in our banking system. Plus our rates are one of the lowest in the region, mainly because we do not have an interest rate policy tweak in our Monetary Policy Setting.
This is making people leverage to the hilt. The guy mentioned in the article, a private banker, took out a 40-year $1m loan. Imagine paying a loan for 40 years - I think more than half of the repayment will be for interest alone, meaning he may have to repay >$1.5m after the 40 years. It's really hard to imagine, but perhaps I am just very debt-averse. These people are probably intending to make the spread and laugh their way to the bank by renting out at a 3% to 4% yield.
You are absolutely right in the business sense. If a bank willing to lend me a 100 year loan at a even more lower repayment rate it would even better. But the asset should be for business only and not for self consumption. The lower the rate of payment the better risk/reward for the person to next generation taking the loan. But is there such a loan from any bank? Perhaps if our concept of this 100 year loan for business investment is "sound", the bank may accept our proposition too. Perhaps it is just can happen in my imagination only. i am very debt-averse too.


WB:-
1) Rule # 1, do not lose money.
2) Rule # 2, refer to # 1.
3) Not until you can manage your emotions, you can manage your money.
Truism of Investments.
A) Buying a security is buying RISK not Return
B) You can control RISK (to a certain level, hopefully only.) But definitely not the outcome of the Return.
NB:-
My signature is meant for psychoing myself. No offence to anyone. i am trying not to lose money unnecessary anymore.
1) Rule # 1, do not lose money.
2) Rule # 2, refer to # 1.
3) Not until you can manage your emotions, you can manage your money.
Truism of Investments.
A) Buying a security is buying RISK not Return
B) You can control RISK (to a certain level, hopefully only.) But definitely not the outcome of the Return.
NB:-
My signature is meant for psychoing myself. No offence to anyone. i am trying not to lose money unnecessary anymore.