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  • Mortgages & Finance

    Repayment/savings plan for interest only

    Hi all,

    For those of you with interest only mortgages, what % of the positive cashflow you have each month from rent do you put into savings for when the time comes to repay the mortgage down the line?

    What kind of savings or investment account/s do you put it in, and why?

    Do you overpay at particular time periods or just plan to pay it all off at once at the end, and why?

    I'll soon have my second BTL but first interest only mortgage so whilst i understand the benefits of it vs repayment in terms of cashflow, I'm interested in the different savings and exit plans investors use.

    Thanks

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    I think most will say - Refinance and extend mortgage term until its time to sell and move on...

    However I'm interested to see the current methods/thoughts Smile

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    Financial Consultant working with Property Tribes Financial Services.

    BTL Specialists.

    Always cover your debts, don't leave them for your loved ones to pick up. Ask me how - austyn@ptfs.co.uk     07500 871209


    I've seen a few people suggest that towards the end of the mortgage term, sell half of the portfolio to hopefully pay off the mortgages on the other half.  It all hinges on a sufficient amount of capital appreciation though of course.

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    Yes I've heard of that but I'm more thinking about best course of action in the 20 odd years until that point. Agree that's a little risky too!

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    Buy other properties with the saved  cash flow

    That generates more income to buy more

    After a while its self perpetuating

    Then yes when the time comes sell half to pay down the other half or sell the lot

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

    Fair enough..makes sense! Where (savings/ stocks and shares ISA etc) would you put that cash savings whilst waiting for it to be enough to do anything with?
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    I just put it  in a bog standard building society or premium bonds ( up to 50K)

     Anything low risk - this is your buying fund so relatively short term

    It doesnt  matter too much about the interest rate as it pales into insignificance compared to the returns on property

    When you start to top out on purchases you could pay off instead 10% capital each year as a lump sum which most lenders allow

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