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  • Property-a-holics

    Mortgage Free or another BTL

    Hi everyone, this is a great forum I've learnt loads form, finally got around to joining.

    I have quite a general question, I keep flip flopping between being Mortgage free or buying my third BTL.

    My current situation, Resi worth £550k, £160k mortgage 2.09%, saving in offset account £110k, so I pay interest on £50k. In two years time I could effectively be mortgage free by my offset saving being about £150k which would match my mortgage of £150k..simple logon and transfer funds and mortgage free life (with little saving though!)

    When I  look at the current situation I'm comforted by my relatively large savings and would not pay the mortgage off and instead keep my saving and carry on paying the mortgage, if things took a downturn then I'd have a decent safety net.

    However, I can't stop looking at properties and have seen one in Kettering which I like, it's up for £185k, I'd hope to secure it for £177k, rental would be about  £800pm, mortgage repayments of sub £300 so clear £500pm. Ok, not  a great return but I do like the house and it would rent easily, has parking for 4 cars and only a few doors away from a property I already own, so know the area well. I'd use £50k of my saving for deposit leaving £60k saving.

    I appreciate there is no definitive answer but if you were in my position would you try to make better use of the £110k?  or think better opportunities come to those with cash and the safety net is worth hanging on to in challenging times?

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    At present if you lost your job for example (I assume you also work) you would not be eligible for any benefits apart from JSA/Child Ben - as you are barred by having savings/capital above £16k. 

    Retaining the ability to clear your PPR mortgage I would say is valuable in current economy.

    If you check HMRC website there are interesting stats - eg 5 yr age banded earnings data show that peak earnings are in 45 to 50 age band - with progressive falls for each later 5 yr age band - I assume that is due to a combo of redundancies/ill health of jobholder/partner.

    There will still be plenty of property bargains after Brexit so I would hold fire at present and see how land lies in a year or two.

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    Many thanks for the reply. Yes, I do work but I'm self employed and recently my earning have been up and down hence why I keep the reserve cash.

    However, I do think that if I have some more properties then as long as they are let it will give me an income should self employed life get tough.

    I've made an appointment to view this one in Kettering, maybe I'll try a lowish offer and see what happens, the seller has no chain and is keen to move. Kettering is not he most exiting area but does seem to be steady and not had drops like other areas.. yet anyway!! 

    Not sure what will happen post Brexit, might be some deals to be had but a lot of people waiting to see what happens, feels like quite a lot of pent up demand. Quite a few Europeans in Kettering so no idea how things will pan out regarding rental demand.  

    I think it's boredom that's gets me looking every few months, I do enjoy purchasing property! 

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    SE can be tricky - main thing to my mind would be to ensure you have a substantial cash buffer so as to fund potential voids - esp in a falling market where selling can be tricky - so best not to be over exposed.

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    I had the same quandary, I am in SE London, main prop bought in 2011 worth 550k mortgage of 237k

    3 x rentals generating 25k pa net, savings of just over 120k

    I would like to be mortgage free by 55 and have now decided to use my funds to build an annex for 75k.

    and then use any spare cash to pay off the house

    its not just the mortgage you have to think of but the insurance, boiler cover, contingency for repairs, letting fee if appropriate...


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    Thanks for all the info, I went to view the property this morning, it was a little more run down than expected but still general tidy up would make it a good rental. It was up for £185k, I offered £170k and then final at £172k which I’ve not heard back. See what happens, I’m in no rush, I’ll hold onto the cash until something better comes along, £170k for £775 rent is not that great anyway.

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