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  • Buy-to-Let

    Expand portfolio or pay down?

    Dear Tribers.

    I have been in this quandary for the last year and need to make a decision as to whether I should buy another property or pay down debt.

    My current situation is that I have a small portfolio of 3 BTLs in London at 30 and 50 LTV which yield about 2-2.5k profit per month.

    My current mortgage is 230k of which 150k is IO, prop value 550-600k, I have no issue with this as I plan to downsize and buy a 2 bed bungalow when I reach retirement (I am 46 at the moment) I have 100k to invest however my family want me to pay off the mortgage.

    They are sick of me working 6-7 days a week for the last 10 years, PT job pays 28k with my other income being 25k pa (excl rental income) I did this to fund my current house and portfolio and would like to buy one more. My plan was to semi retire at 55 and my options are;

    1. pay off mortgage, this would bring down the payment from 753 to about 250 pm IO

    2 Buy another prop which should provide cashflow of about 4-500 per month, I would be looking to buy in Dartford as I have seen prices drop by 20k,

    3. Invest in index and share funds for income

    Views appreciated please!

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    Expand for me.

    Have you considered cheaper properties elsewhere in the UK?

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     buying a new property is a better bet IMO  as interest rates are low.
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    If your mortgages are fixed and at a low interest rate then it may not be worth paying them off any more at the moment.

    What would the Dartford property cost to buy (all costs) and what would it rent for nett amount?

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    Dear Tribers I would prefer to invest locally as that has worked best for me, Dartford prop. 2 bed would cost 250-70, Rent 1000-1100 pm
    Deposit 25% plus SD est mortgage 350-400 pm
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    Paying down your mortgage would free up the money per month you could clear from buying another Dartford property?

    It's just an option of course, but at least you'd save the Stamp Duty payment, not have to refurb, not have another tenant to deal with etc. etc?

    No capital growth though, at least not in a new property, but that might not happen for a while as you state there's been a drop recently?

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    It is hard to comment without knowing your own attitude to risk re all those options, (I'm not an IFA) but in my opinion, there are some good reasons why Dartford and other areas around there look well placed for rental and capital growth going forward.

    Kind regards

    David Lawrenson

    https://www.LettingFocus.com

    Unbiased and Independent Private Rented Sector Advice for Landlords and Organisations

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    David, what are those factors in your opinion? From the numbers here it seems the rental yield is already at 4.6% which is of course pretty respectable for London and surrounding areas. I ask because I’m considering buying additional property.
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    Buy another property possibly 2 and use the cashflow generated to pay down the mortgage, so you still only need 250 of your own money towards the mortgage.
    That is what i would do
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    Slowly working towards financial freedom


    Forgive me, I am a bit confused .... Could you clarify why you are working 6 - 7 day weeks because it appears that you have a part time job?

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    Hi Vanessa
    My PT job is 3 days and I do the other work on my days off
    Regards
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