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  • Buy-to-Let

    Strategies to pay off interest only mortgages

    Dear Tribers

    Just writing to ask how are we intending to pay off the IO mortgages? Or will they kept into retirement?

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    I personally intend to keep them into retirement but is that recommended?

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    you will likely remortgage many times during term of the mortgage and may sell / gift to children or other legal entity you own or set up etc (for tax / inheritance).

    most banks have an age limit so in theory could have mortgages after retirement but maybe not til you're 100!

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    regards Andrew Peers - property investor / sourcer - 07912674181

    a.peers@seamlessproperty.co.uk

    Property Redress Scheme Number 011436     NLA member 174404


    You can get BTL mortgages 20 + years  past the state retirement age

    So just remortgage at end of term and  keep the asset

    Let it then double in value and giving you 20 years of income to supplement the state pension

    Then pass on to kids or sell

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


    There is no right or wrong answer to this

    Today with s24 I a.m. pleased I took some CR (Capital Repayment) mortgages it’s allowing me to remortgage at better rates etc.

    But if someone is growing a business I can see its merit if you believe house prices will keep rising.

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    Learn Change and Adapt ?????

    A common plan is to keep the mortgages to the end of their term and then sell off some of the portfolio.  If you have had the properties for 20 to 25 years, it is likely that there has been some capital appreciation.

    You work out how much equity you have, decide which properties you wish to keep, then sell the others.  The equity from the sales will pay off the mortgages on those properties that you wish to hang on to, making them unencumbered and giving you an income in retirement.

    Nick and I have earmarked five rentals plus our own home that we wish to keep into retirement.  We currently have enough equity to pay off 3 of the mortgages on those six and we have another ten years to go, so our plan is on track.  You must also obviously allow for capital gains liability on sale of investment properties, so factor that into your spreadsheet.

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    Coming soon Investorsk8.com

    Wisdom - an integration of knowledge, experience, and deep understanding that incorporates tolerance for the uncertainties of life as well as its ups and downs. 

    Death and debts can be a good thing less IHT to pay

    DL

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    Learn Change and Adapt ?????

    In order to limit inheritance tax, Is it possible to gift children properties with existing mortgages on them? How do the mortgage providers feel about that? Can children inherit properties with mortgages and keep them running?

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    I have all mine on repayment and make sure that the rent covers mortgage (including repayment), maintenance and tax.  This does mean I have been low geared but given the current government direction I am trying to pay off all my mortgages asap instead of expanding.

    I know some people think S24 will be reversed in the future, personally I think it will be extended because of the way it was done, they have removed all of the interest as an allowable expense but are giving you a 20% relief regardless if you are 20% or 40% tax payer.  My view is this "relief" will be removed, most likely when the 4yrs or implementation of the current system have ended another 4yrs will be implemented and will include companies with mortgages for residential rented properties...

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    And then In an utopian future we pay the tenant to stay in the property. Roles reversed. ?

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    Coming soon Investorsk8.com

    Wisdom - an integration of knowledge, experience, and deep understanding that incorporates tolerance for the uncertainties of life as well as its ups and downs.