With the recent shift in shorter term mortgage rates a second look at the 10 year fixed term as
an inflation hedge mortgage strategy may be a timely.
For those home owners with some equity in their home who may want to consolidate debt or refinance to take out equity and buy a second home or investment property the longer term mortgage and
inflation hedge mortgage strategy can provide peace of mind.
Not exact matches
In theory, getting a fixed rate
mortgage to
hedge against
inflation isn't a bad idea.
«What the
inflation hedge does is spread that interest rate shock over the five years of your
mortgage term, which helps absorb the payment shock,» explains Nawar.
While equity REITs are backed by real property and thus have built - in
inflation protection (not to mention growth potential),
mortgage REITs are essentially single - strategy «
hedge funds» that borrow short - term funds cheaply and invest the proceeds in longer - duration
mortgages.
Having a
mortgage as a
hedge to
inflation is great if you HAVE to have a one, but the math gets better without the
mortgage payment.
A fixed rate
mortgage (especially at today's rates) can be a good
inflation hedge (probably even better than stocks).
It's also a decent
inflation hedge to have a
mortgage.
Result: You have a large
hedge against
inflation (your
mortgage), can move anywhere at any time (you're renting), and a secondary source of income (your tenant), subsidising your rental costs.
On
mortgage front, I believe if we continue live in the current home, then the fixed payment will act as
inflation hedge.
If you can afford a big down - payment during high interest periods, not only would putting the money into your property be a good idea (since high interest periods also have high
inflation and real estate is a great
inflation hedge), but since you'd have a smaller
mortgage, you won't be paying as much at the super-high interest rate.
You have
inflation risk in the pension and you can
hedge some of that with nominal debt, i.e., a
mortgage.
529 ABLE Accounts,
Mortgages As
Inflation Hedge, Building An Equity - Indexed Annuity, And Qualified Charitable Distributions From IRAs Course
A locked in rate of interest on your home
mortgage can be a
hedge against
inflation and market pressures that drive up the rental rates that landlords can demand.
Also, locking in your rates for 30 years acts as a
hedge against
inflation, ensuring that your
mortgage payment stays the same, even as house prices and rents go up over time.