The impossible dream

Tahlullah · 15 June 2014 at 2:48PM

Thinking of buying a small buy to let flat. I seem to swing wildly between yes and no on this issue.

I am getting close to being mortgage free, so why put myself into further debt so close to the end?

But, buying a BTL will give me an income for years to come, and the capital if and when I choose to sell.

Wouldn't be a huge debt, as it would be secured against my main house so purchased outright without needing a BTL mortgage, just a continuation of my current mortgage as I can draw down the capital without having to go though a lengthy mortgage application.

But, I would be in debt for longer, with a limited period to repay, certainly not over 25 years any more! But, if it was tenanted quickly, I could continue to pay my current mortgage at the same rate, so only extend the period until I am mortgage free.

Can't seem to make a decision. Clear my debt and sit pretty in a couple of years once the mortgage is paid off, or guarantee myself an income and the security of a capital asset into the future, but won't be mortgage free in 2 years. So, would have to remain in full time work for longer.

Decisions, decisions...

TallGirl · 15 June 2014 at 4:04PM

That is a really tough one and one I have been pondering as well. I don't think it's easy to be a landlord (well we see the tenants side in our day jobs don't we) so if I was to do it it would have to be close by preferably in a nearby street as I would know the type of house was sound and they are easily let to families. Would be expensive though. Where and who are you thinking of letting too and how much. With universal credit coming in I would be slightly worried about HB. I think there are a lot of things to consider if you do go into that game but I am so so tempted too.

Tahlullah · 15 June 2014 at 4:40PM

TallGirl wrote: »

That is a really tough one and one I have been pondering as well. I don't think it's easy to be a landlord (well we see the tenants side in our day jobs don't we) so if I was to do it it would have to be close by preferably in a nearby street as I would know the type of house was sound and they are easily let to families. Would be expensive though. Where and who are you thinking of letting too and how much. With universal credit coming in I would be slightly worried about HB. I think there are a lot of things to consider if you do go into that game but I am so so tempted too.

Hello TG, yes, we know what the other side of the coin looks like through our work, but perhaps that's why we should be looking at this seriously. We know that people struggle to find accommodation and that if homeless, the LA have a duty to house and are now looking towards the private sector to discharge that duty, so in reality, there will always be tenants for the private landlord.

Not particularly worried about benefits. HB paid to tenants now anyway. And we understand the concept of s8 and s21, so know what to do and when. The only consideration for us both would be taking on further debt. You are already MF and I am well on the way. But wouldn't we be slightly mad not to think about our futures? My pension is not going to be that great, so shouldn't I be thinking of ways to supplement it now, whilst I am still fit, active and in employment?

Just need to find the right property to buy, close to where I am currently working, which won't cost the earth, but will still give me a modest income, which I can still pay off in a reasonable period.

If you do look at this in more depth, let me know your thought processes on why you are going to do it, or why not and I will do the same for you.

Tx

gallygirl · 15 June 2014 at 7:07PM

Well, a big thumbs up for btl from me :T and with your background you know many of the pitfalls.

If you finance by remortgaging your own home you can still offset the mortgage interest against tax as long as you keep clear records showing the remortgage money in & out etc. Find out if you can keep the original and remortgages separate, that way you can OP on your original mortgage and keep the tax relief as long as possible.

Tahlullah · 16 June 2014 at 10:36PM

Thanks for the advice GG. I will ensure I seek professional advice in relation to capital gains tax.

I am looking out for something now, accepting that I will be pushed further into debt. And if not, I will just continue paying down the mortgage.

I know I was looking for a Plan B, but this is silly...

Tahlullah · 19 June 2014 at 8:45PM

So, have now just offered and been accepted to buy a second property for rental. My MFW days are truly scuppered at the moment, so thanks everyone for your support thus far. I will not be posting on this thread anymore, but may return in the future with a fresh resolve and possible realistic dream.

Best wishes to you all with your future dreams and thank you again.

Tx

gallygirl · 19 June 2014 at 9:00PM

:eek: No you can't go :eek:. You need to tell all and hang about for the next 20 years :rotfl:.

Good luck :T

TallGirl · 19 June 2014 at 9:46PM

Congratulation but we need to know more you can just add the new mortgage and still aim for MF. Well done would love to know more ofcoursel

icontinuetodream · 21 June 2014 at 1:50AM

don't go!!!!

you still have to pay this one off and we want to see you do it!!

Tahlullah · 23 April 2017 at 9:02PM

Hello everyone. I have not been posting on the site for a few years, but have been lurking and reminding myself of my Mortgage Free Dream.

As you can see, I have chosen to re-start my old diary rather than begin a new one. Somehow, I think it will be easier for me to see where I came from and where I end up in the future on one thread, rather than having my past lost forever in the ether.

So, I wish to be mortgage free. I continue to be hopeless at handling money and the years have not improved me. From my past listings, I was about to buy a new property to rent out. I did this and it is going well, no problem, lovely tenant. Unfortunately, I have been spending the income rather than paying down my mortgage.

So, where am I now financially? I have a mortgage of £50,000 and still have an offset mortgage which has 13 years to run. I wish to pay it off by 55. As before, I am still 55 until my 56th birthday!

Currently, I pay £1000 per month, but I know I have some big debts to pay off shortly, which will push my mortgage up to £60k. Until that point, I need to reduce the mortgage as much as possible. This is where my money saving has to come to fore.

I will come back, with a plan going forward, and with an idea of my budget so I can see what I can save and or overpay before the big debt day comes.

BYW, Rufus is still here!

The impossible dream

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