Use cash to buy house out right or multiple BTL mortgages?

Collapse
X
  • Filter
  • Time
  • Show
Clear All
new posts

    Use cash to buy house out right or multiple BTL mortgages?

    Hello I am after some advice.

    I currently have a mortgage on my family home and also a BTL mortgage on a rental property.

    Theres around £78,000 left to pay on my rental property , I’ve worked out I can save approx £2000 a month, so I could pay this off in just over 3 years.

    My question is do I pay this mortgage off and use the rental profit of around £350pcm to put towards another property, save up for another 4/5 years and buy another property outright and do the same every 4/5 years

    or should I buy a house every 1/2 years with a BTL mortgages.

    Will waiting 4/5 years to save up for each house cost me in the long run due to house price increases?

    My current thinking is if I set up a LTD company for tax purposes it will be much simpler if I buy the houses outright rather than getting a BTL mortgage through a LTD company.

    #2
    Personally I would focus on paying off my Residential mortgage before making subsequent acquisitions to the rental portfolio, currently you enjoy various tax benefits on the BtL but none on your main residence so for the present it might be considered prudent to use such surplus monies to make further monthly savings on the cost of your home and increase your potential disposable income.

    Buying additional property via an SPV makes, based on current tax legislation, economic sense, pricing on LtD Co BtL’s are very competitive when compared to similar loans to individuals; I am not a Tax Advisor and therefore would encourage you to consult a qualified accountant and NOT someone whose title indicates “ Bookkeeper & Accountants”

    The decision on which option to take is dependent on your long term investment planning with an eye to retirement and whether you are deeming it more prudent to have a number of properties generating income without being saddled with mortgages or taking advantage of prevailing tax benefits but acceptingthat nothing can be guaranteed.

    Comment


      #3
      is there any equity in your current BTL that you can release to use as a deposit for another BTL? that way you may be able accumulate properties every couple of years, it has its risks of course (property price drops) but if you are sensible about your investments and improve the properties you buy rather than just relying on rising markets to create the equity, then building a portfolio might be achievable.

      construct a business plan with properly planned outcome AND an exit strategy - tax on BTL etc is going to change, so you need to have a long term plan and take professional advice, my comments are based on my personal experience and are not professional advice

      Comment


        #4
        Loanarranger's advice is sound.

        It's hard to beat paying down the mortgage on your home as an investment in the long (medium) term.
        It can be beaten - if you are the only income and you only part own the property, so take some advice.

        The essential consideration isn't tax or what's efficient - it's where are you now in life and what would you like to achieve over what timeframe?

        When you talk to financial planners they will take an objective view of a financial plan. You should think what you want out of life.
        Having an extra holiday next year or a nicer car might have a greater value than a pension in 30 years time.
        Or planning for your own (or children's) future might make that seem like a daft notion and you'd feel happier knowing your future is more secure.

        Life has a habit of changing unexpectedly, and I'd suggest a long term "life plan" with a 5 year actual "plan" - on the basis that a lot can happen in 5 years.
        In 2013, we were "happily" in the EU, we had a coalition government and a sane US president.
        By 2023, who knows?
        When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
        Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

        Comment


          #5
          while I agree with the advice given re paying off your mortgage - you really do need to consider long term planning. yes, paying off your mortgage reduces your payments, but by the time you have, property prices might have increased to a point where you find yourself priced out of the BTL market. But by then there might be a sounder investment strategy and BTL might be 'old hat'.

          you need to decide what you want long term, what risks you are prepared to take and in what way.

          Comment

          Latest Activity

          Collapse

          • Mortgage ERC
            Landlord4321
            Good evening,

            I would be interested if anyone had any views on mortgage early repayment charges. Unfortunately my circumstances have changed significantly over the last 8 months and I am in a situation where I am forced to sell my buy to let property, mainly due to a change in my financial...
            19-07-2019, 20:18 PM
          • Reply to Mortgage ERC
            Landlord4321
            I believe the ERC is a set rate. Some customers will pay the fee that will equate to less than the existing interest balance so will benefit. Other customers nearing the latter part of the deal will pay a charge considerably higher than the remaining interest balance.

            I guess like anything...
            20-07-2019, 11:30 AM
          • Refinancing BTL when beneficial ownership has been moved into an LLP
            StevieG
            I moved the beneficial ownership rights to my properties into an LLP two years ago in response to section 24; however, my existing broker is unable to obtain a new mortgage for one of the properties as the tax computations associated with my SATRs now have a line for 'income from partnership' instead...
            20-07-2019, 10:29 AM
          • Legal fees or cashback for remortgaging
            blinko
            Hi guys I'm doing my first ever remortgage I wanted to ask I have 2 products to choose from both are offering me a good rate 5 year fixed 2.1% £1,000 arrangement free with free standard valuation but one product offers free legal fees and the other offers £300 cashback which one do you think I should...
            16-07-2019, 17:18 PM
          • Reply to Legal fees or cashback for remortgaging
            loanarranger
            I agree it allows the borrower a greater degree of control over the legal processes.
            20-07-2019, 10:02 AM
          • Reply to Legal fees or cashback for remortgaging
            jpkeates
            Hello 2008, welcome back!...
            20-07-2019, 08:48 AM
          • Reply to Mortgage ERC
            loanarranger
            You are indeed correct that Fixed Rate Mortgages do have products which have an ERC on a reducing scale, a feature which is fully detailed in the Key Facts Illustration, unfortunately as in your case the ERC is set at a Fixed percentage throughout the initial incentive period, this in itself might have...
            20-07-2019, 04:11 AM
          • Reply to Mortgage ERC
            Landlord4321
            Most mortgage companies offer a progressive ERC where the fee changes every year which reflects the lenders actual losses. In this case the ECR is fixed for the entire period, and I'm nearing the end of my term.

            The charge they will make is a lot more than the interest for the remaining...
            19-07-2019, 23:20 PM
          • Reply to Mortgage ERC
            boletus
            If you accept you freely entered into a business contract where the terms were explicitly stated and you were aware of those terms, then why now say it is "daylight robbery" to be held to those terms?...
            19-07-2019, 22:39 PM
          • Reply to Mortgage ERC
            loanarranger
            I regret to advise you that your entire interpretation of the law and rules pertaining to mortgage contract.
            You entered into a contract to borrow a sum of money secured against a residential property which you declared was for investment Not owner occupation by yourself, The funding as is generally...
            19-07-2019, 20:50 PM
          Working...
          X