Do Billionaires have mortgages?

I heard one UK billionaire say in a news article that he has 'mortgages up to here' (meaning a lot)





How do people of such wealth need bank loans to pay for a house when they're net worth is 5-8 times the price of some homesDo Billionaires have mortgages?
Sure, they can have mortgages. Maybe they could pay cash, but why should they? They're smart enough to realize that many fortunes have been made in real estate. And the real fortunes have been made with leverage--by using borrowed money, that is, mortgages.





Here's an example: Let's say there's a house that costs $200,000 today. You pay all cash for it. No mortgage. In 5 years, the house is worth $400,000. Excluding miscellaneous expenses, you've doubled your money. You've earned 100% return on your investment. Over 5 years, that's a 20% annual return. Pretty good.





But let's say you only put 20% down--$40,000. You borrow the rest. That means you have a mortgage of $160,000. In five years, the house is worth $400,000. Same scenario as above. But your investment--the money you had to come up with--was only $40,000. You've earned 500% return on your investment--$200,000 on a $40,000 investment. Over 5 years, that's a 100% annual return. Much better.





But let's say you only put down 5%--$10,000. You have a $190,000 mortgage. Five years later the house is worth $400,000. You've earned $200,000 on a $10,000 investment--a 2000% percent return, or 400% annually. Even better.





So billionaires (and wealthy people, and real estate investors) might be able to pay all cash for a property. (And they do, if the cash purchase will sufficiently lower the cost.) But, in general, why should they? There's a lot more profit (and more risk) to use leverage.





Hope that helps.Do Billionaires have mortgages?
It might be that their house is worth hundreds of millions and they do not have that much liquid assets. Many billionaires have their wealth locked up in the value of the company they own. It might not be actual cash. And for somebody to be so financially successfully, they probably know the best way, or have hired experts who do, to manage their money. Every penny matters. Somtimes it could be for taxation reasons.
I guess they could, but think about it, even the most expensive house in the world would only be a small chunk of pocket change for them, so it would be unwise.





Millionaire Ed McMahon was in foreclosure (before Donald Trump bought his house). You'd think if you had millions (let alone billions), you'd pay cash for your house (and put away some cash for taxes) as to know you'd never lose it, no matter how much you squandered your wealth.
The wealthy use their investments wisely... so most of them probably have large mortgages on most of their properties.





It also means a few less bills for them for insurance payments and tax payments- the mortgage company will handle all of that for them.





I work for a mortgage company and the other day had a client with 5 million in the bank, was purchasing a $300,000 investment home and was only putting a $60,000 down payment, financed $240,000. He will keep his other money in investments earning more than his interest rate, and end up making even more money in the long run. And he'll write off the mrotgage interest on his taxes.





Mortgages are a VERY smart investment vehicle.
Yes, because they're as stupid with their money as poor people, they just have more of it. Did you see how many Hollywood actors and sports figures are behind in their mortgages?