pay off mortgage ? slum btl?
Discussion
Like many people, I have the very first world problem of wondering what to do with our cash over the next few years.
So we have a decent Victorian terraced house in london. We are about to extend it and it'll be a 4 bed 2 bathroom house, with downstairs bog, a modest 40 ft garden, a very nice kitchen. Worth about 600k or so. We owe 100k on it which is a repayment mortgage at 1.59 pc fixed for 2 years , 16 years left on it.
The problem is this. We have about 2k a month surplus income each month. We will hopefully have kids in the next year or two. I could get the house paid off in say 4 or 5 years and be mortgage free by the age of 35.
Part of me thinks thats the cowards option. Shares, been there done that, not made much money- brexit and general global instability scares me.
Ive thought about slum lording (I'd be a nice slumlord) and could probably buy a modest property up north every 18m. However I suspect it would be a massive ball ache and the capital returns would be modest.
Then I go full circle and just think f
k it pay off the mortgage and take stock from there. Pensions are all accounted for and taking care of themselves.
So, what is a girl to do? The cowards way out or start buying up as much of the north east as poss?
So we have a decent Victorian terraced house in london. We are about to extend it and it'll be a 4 bed 2 bathroom house, with downstairs bog, a modest 40 ft garden, a very nice kitchen. Worth about 600k or so. We owe 100k on it which is a repayment mortgage at 1.59 pc fixed for 2 years , 16 years left on it.
The problem is this. We have about 2k a month surplus income each month. We will hopefully have kids in the next year or two. I could get the house paid off in say 4 or 5 years and be mortgage free by the age of 35.
Part of me thinks thats the cowards option. Shares, been there done that, not made much money- brexit and general global instability scares me.
Ive thought about slum lording (I'd be a nice slumlord) and could probably buy a modest property up north every 18m. However I suspect it would be a massive ball ache and the capital returns would be modest.
Then I go full circle and just think f
k it pay off the mortgage and take stock from there. Pensions are all accounted for and taking care of themselves.So, what is a girl to do? The cowards way out or start buying up as much of the north east as poss?
I think in the current environment pay off the mortgage & take stock in a couple of years is a decent plan.
Intérest rates will rise over in due course; stock markets will fall. There is a lot of economic uncertainty out there. Things may not be clearer in a couple of years, but at least your mortgage will be gone!
Intérest rates will rise over in due course; stock markets will fall. There is a lot of economic uncertainty out there. Things may not be clearer in a couple of years, but at least your mortgage will be gone!
I'm in a similar position to the OP (in terms of age, house) albeit in a provincial city and with 2 kids.
I'm opting to take advantage of low interest rates by paying whatever I can afford to clear debt. I'll be free of all debt and own all assets within 35 months...not that I'm counting!!
Perhaps low interest rates are the new norm, but I'm not taking any chances.
I'm opting to take advantage of low interest rates by paying whatever I can afford to clear debt. I'll be free of all debt and own all assets within 35 months...not that I'm counting!!
Perhaps low interest rates are the new norm, but I'm not taking any chances.
Edited by Basil Hume on Friday 2nd June 21:21
Who knows what the economy and job market is going to do after Brexit. Sitting in a house with no mortgage whilst everything goes to st around you isn't a bad place to be.
Get made redundant? Never mind, you don't need much to cover the utility and food bills each month once the mortgage is out the way.
t around you isn't a bad place to be.Get made redundant? Never mind, you don't need much to cover the utility and food bills each month once the mortgage is out the way.
DaveCWK said:
Wouldn't you be better off ensuring you are using all available savings methods >1.59% before putting anything into the mortgage?
For example, Nationwide/HSBC do £500/month regular savers at 5% or so, there were current accounts offering 3% on smaller deposits etc.
I often find regular savers a waste of time and many require a current account in the first place. For example, Nationwide/HSBC do £500/month regular savers at 5% or so, there were current accounts offering 3% on smaller deposits etc.
Interesting you think buying in the north would make you a slum lord.
If thats your genuine attitude its prob not for you.
Many southerners would consider a £600k london home a bit of a slum - many northerners wouldnt live in a terraced house.
Only you can decide what you want to do but if you look at your tenants as slum dwellers youll never get on and theyll see through you
If thats your genuine attitude its prob not for you.
Many southerners would consider a £600k london home a bit of a slum - many northerners wouldnt live in a terraced house.
Only you can decide what you want to do but if you look at your tenants as slum dwellers youll never get on and theyll see through you
KTF said:
Condi said:
Sometimes wonder what went wrong if someone at 30 can have 500k of equity in a house and 2k spare cash a month...
If you are a saver rather than a spender, it's amazing what you can achieve.To have 2k a month SPARE, after mortgage payments, bills, food, entertainment, travel etc is certainly not normal, and not usual, even if you are a saver. You still need a huge salary to start with. Most people dont start work until they are 21. So even if 9 years ago, they bought a house for 400k (just over half its current value) and put down 100k deposit (which would be way above average), that means in 9 years they've put 200k into the house... which is over £1800/m.
No amount of saving, on anything less than one or 2 6 figure salaries, will get an average person anything close to saving that much.
Im not knocking the OP, if you've done that then fantastic, and well done. But it is rather unusual. To suggest someone average can get
anywhere close by 'saving' is crap.
princeperch said:
Like many people, I have the very first world problem of wondering what to do with our cash over the next few years.
So we have a decent Victorian terraced house in london. We are about to extend it and it'll be a 4 bed 2 bathroom house, with downstairs bog, a modest 40 ft garden, a very nice kitchen. Worth about 600k or so. We owe 100k on it which is a repayment mortgage at 1.59 pc fixed for 2 years , 16 years left on it.
The problem is this. We have about 2k a month surplus income each month. We will hopefully have kids in the next year or two. I could get the house paid off in say 4 or 5 years and be mortgage free by the age of 35.
Part of me thinks thats the cowards option. Shares, been there done that, not made much money- brexit and general global instability scares me.
Ive thought about slum lording (I'd be a nice slumlord) and could probably buy a modest property up north every 18m. However I suspect it would be a massive ball ache and the capital returns would be modest.
Then I go full circle and just think fk it pay off the mortgage and take stock from there. Pensions are all accounted for and taking care of themselves.
So, what is a girl to do? The cowards way out or start buying up as much of the north east as poss?
I would say that it depends on what other investments you have and how diversified you are. So we have a decent Victorian terraced house in london. We are about to extend it and it'll be a 4 bed 2 bathroom house, with downstairs bog, a modest 40 ft garden, a very nice kitchen. Worth about 600k or so. We owe 100k on it which is a repayment mortgage at 1.59 pc fixed for 2 years , 16 years left on it.
The problem is this. We have about 2k a month surplus income each month. We will hopefully have kids in the next year or two. I could get the house paid off in say 4 or 5 years and be mortgage free by the age of 35.
Part of me thinks thats the cowards option. Shares, been there done that, not made much money- brexit and general global instability scares me.
Ive thought about slum lording (I'd be a nice slumlord) and could probably buy a modest property up north every 18m. However I suspect it would be a massive ball ache and the capital returns would be modest.
Then I go full circle and just think f
k it pay off the mortgage and take stock from there. Pensions are all accounted for and taking care of themselves.So, what is a girl to do? The cowards way out or start buying up as much of the north east as poss?
It's a very low leverage home and as your income is clearly heavily outstripping the cost of servicing the £100k debt there isn't any real, immediate need to pay it down.
As such, if you haven't built up other investments then given that you plan to change your life considerably in the near term by adding children I would be inclined to run the debt and build up the most cost/tax effective fighting fund rather than extend exposure to residential property or pay down the small debt. A sizeable savings fund gives much greater future flexibility for life's requirements and lowers stress significantly. Especially if anything adverse were to happen as a result or at the time of starting a family.
Condi said:
Seriously? Think about it for a second. To earn 2k/m after tax you need a salary of what, 30k a year? The average salary in the UK is 28k a year, so to have 2k a month salary you need to be on an above average salary to start with.
To have 2k a month SPARE, after mortgage payments, bills, food, entertainment, travel etc is certainly not normal, and not usual, even if you are a saver. You still need a huge salary to start with. Most people dont start work until they are 21. So even if 9 years ago, they bought a house for 400k (just over half its current value) and put down 100k deposit (which would be way above average), that means in 9 years they've put 200k into the house... which is over £1800/m.
No amount of saving, on anything less than one or 2 6 figure salaries, will get an average person anything close to saving that much.
Im not knocking the OP, if you've done that then fantastic, and well done. But it is rather unusual. To suggest someone average can get
anywhere close by 'saving' is crap.
OP made a lot of money on property and sold at the very right time and bought in an up and coming area from memory. Its not uncommon, many people could do it, I probably wouldn't want to live in an up and coming area as they're mostly grim, but huge sums of cash can be made. The 2k a month thing is irrelevant, most people on half decent money in town with no kids will be in that situation.To have 2k a month SPARE, after mortgage payments, bills, food, entertainment, travel etc is certainly not normal, and not usual, even if you are a saver. You still need a huge salary to start with. Most people dont start work until they are 21. So even if 9 years ago, they bought a house for 400k (just over half its current value) and put down 100k deposit (which would be way above average), that means in 9 years they've put 200k into the house... which is over £1800/m.
No amount of saving, on anything less than one or 2 6 figure salaries, will get an average person anything close to saving that much.
Im not knocking the OP, if you've done that then fantastic, and well done. But it is rather unusual. To suggest someone average can get
anywhere close by 'saving' is crap.
Mortgage would be my thinking.
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