As you get older (I'm 36 by the way) you sometimes ask yourself how did I end up where I am.  I recently moved in to a large 8 bed, 7,000 sqft house yet I feel I do not work half as hard as some people and they have a lot less. And after much thought I realised it was done to one thing: Gearing.

Gearing means your level of borrowing.  If you are highly geared you are highly borrowed. I am highly borrowed.  I buy properties, including my own, with little or no money.

Take my new home for example.  It cost me £550,000.  So I simply got:

1. A 90% LTV mortgage from Northern Rock @ 5.79% APR
2. A £55,000 unsecured loan to fund the deposit @ 17.9% APR
3. A £22,000 unsecured loan to fund the stamp duty payable at 4% of the purchase price (ouch!)

So it was a no money down deal.  But even though it was a no money down deal it was a 'get yourself a large mortgage AND some unsecured loans' deal! This I do not mind as I can service it from all my 200 properties but I thought I would share with you my realisation that the only reason why I have what I have is because I borrow.

To speak to my broker click here and fill out the form.

I hope you follow my path.

Ajay

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Posted on: 26th Feb 2008