Ajay Ahuja Blog Post on Getting Older and Gearing

As you get older,  I sometimes ask myself 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 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 @ 35%APR 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.