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  • Buy-to-Let

    Interest only mortgage in retirement

    Dear Tribers

    I am now 46 and have a small portfolio in SE London, my overall LTV is less than 50% on IO mortgages, I wonder is it really worth paying off 150k mortgage for 300 pm in retirement 

    Regards
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    Is selling up and buying an annuity a way to go?

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    I would say a lot depends on your IHT

    If you are effected by IHT debt at death and retirement can work in your favor

    Your estate will pay less IHT


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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.

    So at the moment that £150k debt is bringing in £300pm?

    If so, is the property worth keeping?

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    I think he means the debt only costs £300 pm

    At todays interests rates its not worth paying of because in real terms its FREE money.

    If you pay it off instead of using inflation to devalue your debt you just replaced the debt with your own money.

    If you still make the income you require with your chosen stress test (higher rates,head winds etc,legislation etc) why pay it off? 

    Inflation is your friend.
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    Thanks for the replies

    I met a taxi driver aged in his late 50s who got me thinking about this, he owed 100k and was paying 400 per month in repayments, his work slowed down and he started to get stressed, he then switched to IO and it reduced to 100 per month. Bank then rang him up and said how was he going to repay?
    He answered not my problem
    Either I will downsize 
    My son may take on the mortgage or
    The life insurance may pay it off
    Either way the house will still be here when I'm gone.

    He refuses to get stressed to pay it off and now that BTL mortgages can be extended to 80 why bother?!
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    " He refuses to get stressed to pay it off and now that BTL mortgages can be extended to 80 why bother?! "

    I wouldn't rely on that being set in stone. Some lenders are more flexible than others but there's no guarantees what your banks position will be in 30+ year!

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    ``He refuses to get stressed to pay it off and now that BTL mortgages can be extended to 80 why bother?!``

    I agree . Its just a state of mind . Some struggle with the concept . Mainly I think because the generation before always a paid off their mortgage so the idea of still having a mortgage at 80 worries them . But if you have a decent portfolio it doesn't matter nearly so much . As long as there is a plan at 80 then sticking  with IO sits well with me .

    But at 80 I may have 20 years to live still so I either extend again ( if the products are still there then ) or i pay it off or sell . If I am not ready for a care home then ( and lots of 80 years olds are not ) then I must have a strategy still because I dont want to be homeless at 80 . My own plan is to extend again if possible or sell a couple of BTL`s to pay it off when the time comes if I cant extend . But until that point I enjoy the rental income from the others  for the intervening years as part of my day to day living fund . 

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    Jonathan Clarke. http://www.buytoletmk.com


    Cab driver was I assume talking about his own residential mortgage - and although he can service the current IOM at £100 pcm he is effectively betting that interest rates will stay low for next 20 plus yrs - as well as having a good pension income to service an enforced change to a full Repayment mortgage in future.

    Latter will be costly as he gets older and available term reduces.

    Yes if he has lots of equity he could downsize - but if he is in SE and wants to remain there he will seldom find anything desirable for less than £300k - plus all transaction costs.


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    If you do pay the whole mortgage off however, (as long as you get the right deal) In the future, you could always use the equity to buy more properties... But as said above, inflation will help you to gain in the long run if you don't.

    I think there are lots of 'ideal's' but once you have decided on your long business term plan, and see that its working, stick with it Smile

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    Financial Consultant working with Property Tribes Financial Services.

    Always cover your debts, don't leave them for your loved ones to pick up. Ask me how - austyn@ptfs.co.uk


    If you have the BTL mtg via a Ltd company is there any limit, such as director cannot be over 80 etc. ??
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    Slowly working towards financial freedom