Pay off my mortgage or invest in buy-to-let
Discussion
ts ... bruce_miranda said:
Haven't been keeping in touch with the housing market. Have a decent deposit for another property but with all the recent noise about 150% tax on buy to let. Is it better to simply just pay off my mortgage or is it still possible to make a sound investment in another property?
So given this, why do you think BTL is good or right for you? If you don't know the answer to this maybe this is not the right way to make a substantial financial decision.However to make a more positive comment. The climate for BTL investments is not going to get better going forward from a legislative perspective. But that will be the same for all investment vehicles. Are you buying for income or capital gain? On the yield side of the equation it is still difficult to make a decent yield if you are inexperienced. Voids/repairs/etc will hit you hard. Keeping the place occupied, which means buying the right place is critical. It's not as easy as people make out, so do your sums well.
If I were you I'd think about what you want out of the money. Paying off the mortgage will free up a chunk of your monthly income and get you away from any risks of interest rate rises or house price falls (unlikely though they seem at the moment).
Taking on a BTL will almost certainly net you more cash on a monthly basis. You will need to put some work into it though, and if the financial climate changes the extra debt you've taken on might become a liability.
Taking on a BTL will almost certainly net you more cash on a monthly basis. You will need to put some work into it though, and if the financial climate changes the extra debt you've taken on might become a liability.
Without getting into any of the rights and wrongs of either, consider this scenario.
What if you pay off your house now, when we might be at the height of a bubble, and want or need to sell later when we're in a slump?
There are so many things to consider, not all of them immediately apparent or explained away on a spreadsheet.
What if you pay off your house now, when we might be at the height of a bubble, and want or need to sell later when we're in a slump?
There are so many things to consider, not all of them immediately apparent or explained away on a spreadsheet.
Put it this way in 20years time what do you think a £500k house today would be worth (in the South East?). Remover you leverage up so let's say you put in £100k now let's say 20 years time it's worth £2m+ sure some capital gains tax but so what you've made massive gains.
But depends on what you want in life? Total debt free is great - but I'd wager you'd then soon want to go for a bigger home..
But depends on what you want in life? Total debt free is great - but I'd wager you'd then soon want to go for a bigger home..
Welshbeef said:
Put it this way in 20years time what do you think a £500k house today would be worth (in the South East?). Remover you leverage up so let's say you put in £100k now let's say 20 years time it's worth £2m+ sure some capital gains tax but so what you've made massive gains.
But depends on what you want in life? Total debt free is great - but I'd wager you'd then soon want to go for a bigger home..
Realistic appraisal of the probable consequences of 20 years of inflation and increasing demand. Providing the UK economy holds up which every indicator suggests it is doing, generally.But depends on what you want in life? Total debt free is great - but I'd wager you'd then soon want to go for a bigger home..
Being debt free is undoutedly the most secure option. However gearing up heavily with BTL proerties bought wisely and managed effectively would probably multiply the growth in value. However with all investments there are risks. Badly managed and unwisely purchased coud make BTL very expensive. The safer way is undoubtedly paying off the mortgage. Good luck to you whatever your choice.
Steffan said:
Realistic appraisal of the probable consequences of 20 years of inflation and increasing demand. Providing the UK economy holds up which every indicator suggests it is doing, generally.
Being debt free is undoutedly the most secure option. However gearing up heavily with BTL proerties bought wisely and managed effectively would probably multiply the growth in value. However with all investments there are risks. Badly managed and unwisely purchased coud make BTL very expensive. The safer way is undoubtedly paying off the mortgage. Good luck to you whatever your choice.
Sure risk free is pay off the mortgage. Being debt free is undoutedly the most secure option. However gearing up heavily with BTL proerties bought wisely and managed effectively would probably multiply the growth in value. However with all investments there are risks. Badly managed and unwisely purchased coud make BTL very expensive. The safer way is undoubtedly paying off the mortgage. Good luck to you whatever your choice.
Actually isn't there a 3rd option here - pay off the mortgage then build up a deposit for a buy to let buy one and it's totally risk free/you'd be able to pay the buy town mortgage yourself without a tennant should you wish.
Maybe BTL was the wrong term I used. So I thought I would put my deposit and buy another property with a mortgage on my own name, rather than use the income from the rental as the basis for my pay back.
I could easily get another mortgage for another property and in the meanwhile rent it out. With so little other investment options out there I was wondering if property was the best bet.
I could easily get another mortgage for another property and in the meanwhile rent it out. With so little other investment options out there I was wondering if property was the best bet.
bruce_miranda said:
Maybe BTL was the wrong term I used. So I thought I would put my deposit and buy another property with a mortgage on my own name, rather than use the income from the rental as the basis for my pay back.
I could easily get another mortgage for another property and in the meanwhile rent it out. With so little other investment options out there I was wondering if property was the best bet.
Property is probably the best bet. Buying in a good area with rising interest in ownership, locally, should make longer term ownership worthwhile. With a growing population substantial net legal migration and substantial net illegal migration the UK ought to be a good bet for rising property prices. I cannot see the demand for housing falling.I could easily get another mortgage for another property and in the meanwhile rent it out. With so little other investment options out there I was wondering if property was the best bet.
However as with all investments past performance may not be a good indicator of future performance and no investment is ever without some risk. Personally I think property prices in the popular areas within the UK will continue to rise. But there are no guarantees. You could seek the advice of a Financial adviser. There e a fair few deals about make sure you get the best rate available without advance fees and lock ins etc.
Good luck to you.
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