Locked and collared
It has been a good day.
We sold our apartment. Secured a loan for another. And, a loan for the renovation work we need to do. We are pretty happy 😊 It is funny being happy about going heavily into debt, but we are pretty stoked that we have at least a chance to do what we want to do with this place.
We also put a collar on the loan meaning, added some protection against rising interest rates, as they are the lowest they have been. I am not sure if it is a good thing, but I remember my parents struggling through ~20% interest rates in the early 90s. We can remove the collar later, if needs be.
I am really happy. Very little has gone our way the last few years, and it has taken its toll on health and relationships, with health being a major source of pain and expense.
We were resigned to doing it the hard way with the renovation work, but I am very glad we have some backing and don't have to kill ourselves to make it happen. I think that we were even able to negotiate a decent deal on the loan that gives us done flexibility and opportunity to work with.
Banks rarely lose of course, but their biggest gains are made by those who do not look at what all these little numbers mean and what happens if they change slightly.
I think many people want to have the best of it all and take loans they can't afford with the understanding that they will be better off later and will cope okay. I had lunch with a friend today who said that we could take a bigger loan because my wife is at the start ogmf her career and can expect to advance in earnings. Yes. But assumptions are always dangerous.
I believe that the housing bubble is going to burst and in Finland, there are a lot of people pushed to their max spending limits and foemrced to buy new homes, even though interest rates a low. When they increase a bit and people start selling what they can't afford to maintain, it is going to have a domiko effect and the dump will drive prices into the ground. We have estimated that we can survive in quite extreme interest rates and above the 6% stress test they use to check fitness. I feel that sevel of stress testing gives a false sense of security.
It is hard to know what will happen, but we were able to collar the loan for 10 years and of nothing happens in that time, we will lose the little we pay each month. However, we are 12 years out since the 2008 GFC and the only economic certainty is, it always crashes. The next crash is going to be harder than the last as the economy is more broken than it was with fewer working tools to adjust it.
For now though, I don't want to think of such things and will choose to instead spend my energy considering the work that needs to be done, the designs we will contemplate and just being glad we have the opportunity to build something that is ours.
Well, mostly the bank's.
Taraz
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I saw the title and my mind immediately went in the gutter...
Congratulations, by the way!
That is where my mind starts ;D
Thanks!
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Congrats, man. It's awesome getting the sale and a good mortgage deal. You can't go wrong with a capped mortgage I think
Cheers! I am looking forward to getting in there and poking around. The house as well!
I do reckon the cap might come in handy over the next 5 years and for the price, it might only take a few months to pay itself back.
5 year ones are the best balance I think. That's what I did. I remember people paying 15-18% here back in the day and bugger that!!!
We went with 10, but I figure it will come into play in 5. Yep, it was crazy, it was higher than credit cards, and they weren't cheap back then either.
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Congratulations.
I know what you mean tho' - it's come to something when we celebrate debt!
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The next debt related celebration will be paying it off in two years with crypto :)
Fingers crossed!
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Congratulations!
You do know that we all expect to read
horribleawesome renovation stories. :)You know they are coming, it will just take time for us to hire some Finnish tradespeople ;D
Should be fun!
I have stories of "professional" renovators too. Not the most horrible stories but not all pretty either. We can someday compare the stories. I hear plumbers are the worst. But I'm sure you do not need those...
I have some interesting stories from when the pipe work was done on this apartment. Carpenters, tilers and electricians....
😂 Know of several good ones?
Can't wait to hear. There's just something with reading / listening or telling stories that did not necessarily make you laugh when experienced but afterwards are just hilarious. After a bunch of therapy sessions and a holiday or something like that.
Sure if your criteria is a bit flexible on determining who is good and who is bad. For example if the plumber tells you they are coming Tuesday at twelve, but they don't and when you call them, if they answer, they just say that can't now, let's try again next Tuesday... and they call you angry the next DAY (that's Wednesday) that here they are now, behind your door and nobody's home. And you're somewhere far far away and promise to come as soon as you can and finally when you're there, the plumber is, of course, gone and they've left half of the stuff you agreed they buy, behind your door, out there in the middle of the city, all staircase doors open, for anyone to take the stuff. And you call them, juuuuuust a tiny bit angry but try to suppress that feeling the best way you can as you know they know that they are, at that moment, god, and you ask the godplumber passive aggressively how's it going and that you are there now and could they come today because you canceled all the stuff you needed to do that day and they just say: "Next Tuesday, didn't we agree on that."
It's always fun if the housing cooperative decide for you that this renovation guy is okay. So you have no say on who you are dealing with.
And that's before anything has actually happened yet in the bathroom. If you're okay with that, I know couple.
...And now get your ass to work preparing the guest room for July...Something like this will work fine.
I think the collared interest rate (fixed) is a good option. It lets you work off a known amount and whilst it may cost you a little extra through not being able to take advantage of rate drops, you make it up in peace of mind. We have a variable at the moment, for the first time in 20 years due to low rates here and will revert to fixed as it rises. It's all about catching the trend, before it happens...
Now...Get that guest room done, July ain't far!
It is going to look a lot like that when you arrive here. Especially the antler chandelier.
Yeah, and ten years is a long time and there is a lot of market volatility to come I believe. The cost of rate drop can't really go much lower than it is now, unless they start paying directly to take loans.
You'll be the one smiling if those rates go up, and having the rate locked at a comfortable level for your budget is a good option. Means you know where you stand.
Don't set my hopes on bloody antlers in the guest room if there'll be none...If it's going to be, let it be! I wouldn't mind a big bowl of M&M's too...With the yellow ones picked out. Who even eats the yellow ones anyway? Lol..
the marginal rate is 0.45% here atm, so I am guessing it won't go significantly lower, but can go significantly higher.
Don't know...Maybe the banks will start paying you to borrow their money! 🤣 That's a low rate!
I doubt it. With the climate crisis definitely going to have an impact, Finland will become one of the most livable places in the world.
There may be a small blip in the bubble in coming years but mid-term Finland, and the whole of Scandinavia, as well as Canada will be very viable real estate investment locations.
On a different note: congrats to both of you.
In the mid-term, for sure. And with the changes in climate it will soon be sub-tropical and a holiday destination :)
Thanks.
Yay that's awesome news :D Have fun building your dreams :)
Very happy for you guys that you can finally work on a project. Not easy though ,but they say it is so rewarding. I also paid a little extra to give the insurance of just in case the rates change. The good thing though if the market does crash you have bought a doer upper and can still make money back.