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It is perhaps a weakness of humans that we always think someone else knows better. Is that why many people are persuaded to hand over more than $5,000 to learn one area of investing that is quite learnable through other (less expensive) means? This could also explain why around 250,000 Australians have been persuaded to buy new units at over-the-market prices (mostly on the Gold Coast) in the last ten years through over-hyped free seminars.

True, some areas of investing are complex. Take wraps (vendor finance) for example. Get this deal wrong and you could be left with a house valued at less than the market price or some type of legal entanglement. It would pay to learn about the ins and outs first.

Often what draws us into expensive education is the notion that certain people hold the ’secrets’ to wealth and passive income, and we want to know the secrets too. They have created massive wealth themselves (usually a by-product of their sheer persistence) and now they teach others. This topic is divided, but here is one helpful opinion from Michael on property investing.com forum:

“There are many seminar spruikers out there that purport to do many things. They’re experts at selling dreams but their private persona is very different to the public one most people see. I can think of two that spring to mind in that regard. I’d reiterate the necessity of doing some solid due diligence including asking for student references from those who’ve successfully used the strategies being taught (and be careful that is not someone in the direct employ of the company) and have a solicitor go over any JV (that is, Joint Venture) agreements to ensure your position is protected and that you have legal recourse in all instances, especially in things like profit splits, responsibilities, liabilities and that its clearly documented in all areas.”

Others believe that $5,000 and ongoing costs is money well spent to shorten your learning curve. The course the forum was discussing was a property options course, and one gentleman commented that a good property lawyer with knowledge of options could explain it for a fraction of the cost. There is also a book/CD on the subject, Options Made Simple, by Rob Balanda.

I do not believe that education will prevent you making mistakes as you go from novice to expert investor. Any path to wealth is one fraught with steps backwards as well as forwards, and it is your response to these challenges that really determines your ultimate level of success. Read up on any multi-millionaire and you will find that they failed at least once before they had major success. With all his great mentoring from his Rich Dad, even Robert Kiyosaki had to close his once successful surf wear business, and start from nothing again before he went onto success in training and wealth education.

On the other hand, it is important to get some knowledge before jumping in. For example, as a novice I might be buying a big block and thinking of doing a subdivision. In my research, I would buy a comprehensive manual on subdivisions, search all the good website pages about subdividing, and check the pertinent council regulations regarding minimum area, driveways and zoning, before going to the trouble of viewing properties or being “talked into it”.

If you are confused whether to go ahead with a live workshop or home study course, why not ask yourself these questions:

- Am I likely to use the information at the finish, or will my lend-ability or fear prevent this?

- Am I motivated enough for home study, or do I need the “kick in the pants” that seminar or course speakers initially provide. Alternatively, would an ongoing mentorship be better value?

- What do other people on the investment forums say about this person/company? Hint: Google “full name” and “property” and “forum”. Go in with your eyes wide open.

Remember that most low cost or free seminars are pullers for longer, more expensive courses. Do you think that the spruiker is going to give away his best tips and tricks there, or keep the details for the people who pay?

I think most millionaires would agree with me, (even though I am in the middle class), that only you know your objectives, risk tolerance, and expectations. Only you can proceed along the learning curve.

Jennifer Lancaster runs Power of Words, copywriting and self-publishing. Her book,Sack Your Financial Planner, gives the novice a headstart when planning their financial independence. Helpful articles at http://www.pow.net.au Please email jennifer@pow.net.au for your free money newsletter.

The cost of two-year fixed rate mortgages has hit an all-time high in a decade, as leading home insurance providers Nationwide and Woolwich raise their rates, forcing buyers to rethink borrowing money to purchase a home. Substantial rises in money market rates, combined with increasing competitor activity, has made it imperative to vastly increase mortgage rates among many of the mortgage providers.

As the credit crunch does its worst, Nationwide Building Society has increased its mortgage rates by 0.5%, while fellow mortgage giant Woolwich, now owned by Barclays, applied a price hike of its own, in addition to abolishing its entire two-year fixed rate range, which is the most popular mortgage for borrowers. As it has become increasingly difficult to fund costs in light of the persisting mortgage crunch, Woolwich have seen no other choice but to implement this action, in order to control demand due to the fact that its rates have become considerably more competitive in the current economy.

Lenders have recently witnessed a significant rise in swap rates (which defines the cost of borrowing fixed rate funding on the money markets) to a new high of 6.49%, which has left them with no other choice than to increase the price of mortgages in general. The average two year fixed rate now stands at 6.75%, which is the highest rate borrowers have experienced in the last ten years.

The situation looks set to only deteriorate further, with lenders having to pay excessively high prices in order to secure funds and a lag time of several weeks before this cost is ever transferred on to mortgage customers. As one of the UK’s biggest building societies, Nationwide pointed the finger of blame towards the marked increase in the cost of borrowing money on the financial markets for the rise in rates, furthermore, it accused a number of its competitors for raising mortgage rates and thus setting in motion the recent events in the housing markets.

The rates on remortgaging homes have also succumbed to the price hikes and remain higher than those for first-time buyers. During this volatile period in the markets consumers can expect to see frequent changes to fixed rate mortgages across the industry from a host of lenders and building societies. Halifax, the Abbey National and Bradford & Bingley are also among those to have raised their mortgage rates in recent times, with Halifax, one of the UK’s biggest mortgage lenders, resorting to only offering its best tracker deals to those who are able to come up with at least 40% of their deposit.

So, it appears that those that will be hit hardest by current market changes may be first-time buyers and younger people buying homes, who may not be able to come up with enough money for a deposit to be eligible for any of the rates that are still being offered by Britain’s mortgage providers and lenders.

Hadassah is an author of several articles pertaining to Mortgages. He is known for his expertise on the subject and on other Business and Finance related articles.