Finance and mortgage/s

[foxmeister]

I currently have a mortgage on my first property (we'll call it something catchy like property 1), had some issues years ago but since then its been fine and is continuing to be paid as normal, currently owe just over 60K which was on a 5yr tracker, now standard variable. I dont live in this anymore, currently rent somewhere else for the few times im back in the UK. (scotland for the record)

Im in a position where im making good money working abroad, i dont intend on doing this for too long so the plan is to either save enough to pay off another property (property 2) in full or at least have a small mortgage and pay off within a few years. This will be my new home.

Question is, am i right in trying to achieve this or should i consider other options? See below...

Just to recap, intention is to pay off property 2 in full ASAP to be mortgage free on this which is where i'll live, and continue with the mortgage on property 1 which will be a BTL then, this will pay itself over the years and eventually be my pension and money for daughter when older

Or

Would there be any advantage to paying into both mortgages to lower them together, but not clearing any as such, the 2 will run side by side over x amount of years? An old boy at work years ago when i was a lad told me it wasnt very wise to pay off a mortgage in full, not sure why though...

Any other advice regarding any other avenues also appreciated

[red_slr]

Would need a lot more info to be able to reply in full (i.e income, outgoings, expected date of retirement, current age, mortgage and property values, pension arrangements and existing investments such as ISAs or NS&I etc). However generally speaking investment returns are currently higher than interest rates however the investment is at risk. Cash investments are, generally speaking returning less than mortgage rates. Thus a lot of it depends on your risk profile.

As for the last part of your post I think that (old) advice used to be to keep a very small balance on the mortgage to enable fast line of credit to be opened as the banks already have an account attached to the property and of course free storage of the deeds. These days I don't really think any of that applies. I could be wrong though.

[foxmeister]

red_slr said:

Would need a lot more info to be able to reply in full (i.e income, outgoings, expected date of retirement, current age, mortgage and property values, pension arrangements and existing investments such as ISAs or NS&I etc). However generally speaking investment returns are currently higher than interest rates however the investment is at risk. Cash investments are, generally speaking returning less than mortgage rates. Thus a lot of it depends on your risk profile.

As for the last part of your post I think that (old) advice used to be to keep a very small balance on the mortgage to enable fast line of credit to be opened as the banks already have an account attached to the property and of course free storage of the deeds. These days I don't really think any of that applies. I could be wrong though.

Ok, some more info...

Income - Currently around 90k, but once i leave this contract i will be back on a basic of circa 30k

Outgoings - Cleared all debt in 2013 (apart from mortgage) so currently still have first mortgage, although brother is now in the property so that is covered (500pm), rent for place i have (450pm) and only recently got another car, still owe around 10k on that (225pm) then bills etc as normal (leccy, food, phone etc)

Retirement/age - Havent considered retirement age as such yet, but would have thought around 60's which was the norm back in the day, not sure hence wanting to clear mortgage, current age is 37

Mortagage/Property value - Current mortgage is just under 500pm and still owe around 62k on it, started in 2007 (period of non payment after losing job in 09, this was consolidated back into mortgage) and this property is worth aroud 90k. Next property im looking at i have already had an AIP and looking around the 150k bracket

Investments - No current investments, only just recently started reading up on some of it but id need to read a lot more, interested though. As for pension, i have been paying into the odd one where the employer matches etc, but as i am a contractor it hasnt been for any real length of time, a year here and a year there kinda thing, be lucky to see a couple k out of it, another reason as to why i was keeping the first property and renting it out, will sell that off hopefully in a few years and bank that as pension

Investment is something that does interest me, but having so little knowledge and not knowing where to start has held me back from getting involved in anything to date really, i would really need to spend some time and know where to be looking into to take that any further but if it is definitely beneficial in the long term for my setup then i will consider it.

I suspected it was as you say, if you have the mortgage and it is ongoing, then the old boys method of thinking was you have your hand in a bigger pot if needed, which i get, but from my perspective im trying to clear a mortgage so i have guaranteed a roof over my head and one less big bill, which hopefully improves the quality of life for myself and my daughter and she will then get the place when i kick the bucket

Edited by foxmeister on Saturday 27th October 03:51

[JulianPH]

The common sense answer is to pay off the debt with the highest interest rate first (be this a mortgage or car loan) as this will save you more money.