A £50k dilemma

[ghamer]

What would you guys do in this predicament,Have planning for an extension.Costing £50k.Have £50k in the bank.Should I
(a)Spend the £50k on the extension and not increase the mortgage.
or

(b)Get the £50k on the mortgage and put a deposit on a BTL with "my" money.

Currently have £65k mortgage on a £350k house I,m 39.

Would would the money men on PH do.Thanks

[kentlad]

ghamer said:

What would you guys do in this predicament,Have planning for an extension.Costing £50k.Have £50k in the bank.Should I
(a)Spend the £50k on the extension and not increase the mortgage.
or

(b)Get the £50k on the mortgage and put a deposit on a BTL with "my" money.

Currently have £65k mortgage on a £350k house I,m 39.

Would would the money men on PH do.Thanks

Do some proper man maths. Work out what the income from the BTL property would end up being after say 5 years (take into account the value of the house but also the likely mortgage repayments & misc. costs associated with owning a BTL property...then compare that to what a £50k extension could do to the value of your current house & see what comes up trumps? If its the BTL then I'd get a further £50k on top of your current mortgage & use the money from that to build your extension.

[ghamer]

Interesting thanks guys.I really fancy a BTL and can probably get a run down 3 bed terrace for say £60k so might look into using a proportion of the cash to buy one and borrow the rest for the extension.I really want to keep the mortgage below £100k though.

[Salgar]

It all depends on what interest rates you're paying, and what yield you're expecting from the BTL.

If you're paying 1% on the mortgaged money, and can get a 5% yield (after BTL mortgage payments and other expenses) then it makes sense to go BTL with the money because you'll be earning more than you're paying. You will also have the increase in value of your house, but that you would have either way you went, so is not really relevant.

[Froomee]

B