What to do?

We are due to remortgage our buy to let in June and the plan was to release equity to buy another. So we got some figures done today. Currently interest only mortgage is £113 pm with rent at £450 pm. Here are the options we are thinking about.

We can remortgage at a better deal and get it down to £80pm interest only.

We can release 16k provided the lenders still value it at 70k to buy another with both mortgages coming in at £270pm combined with hopefully rental coming in at £950 pm combined.

I can take the equity out to put into vanguard life strategy 80/20 which is currently giving returns at 8.8% (i know this is risky but rewards are good for only an extra £30 pm on existing mortgage.

We are also paying £240pm for 5 years for a car so was thinking of using equity to pay this off and use the monthly money to overpay mortgage, this is my preference just now as i don't want to be paying £240 a month for 5 years especially as the car will only be worth a fraction of what it is now and will still be paying £240 pm plus the mortgage gets cleared eventually

We could also do a repayment mortgage which works out at £170 pm.

So these are our options what would you do out of those? All criticism is welcome.

Comments

  • jimjames
    jimjames Posts: 17,532
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    Carmk2008 wrote: »
    I can take the equity out to put into vanguard life strategy 80/20 which is currently giving returns at 8.8% (i know this is risky but rewards are good for only an extra £30 pm on existing mortgage.

    I find it intriguing that you mention that the Vanguard is risky but make no such mention of the BTL properties!
    Personally I'd put the money into S&S via Vanguard or other funds inside an ISA as you're then protected from tax on that money
    Remember the saying: if it looks too good to be true it almost certainly is.
  • Carmk2008
    Carmk2008 Posts: 157 Forumite
    Still pretty new to investments, reason I thought shares are riskier as you could lose it all whereas at least with the buy to let you still have a property. So you think using the equity for more vanguard life strategy rather than paying off the car and using the money from that to reduce mortgage or more towards life strategy.
  • Carmk2008
    Carmk2008 Posts: 157 Forumite
    Should also add the car is 4.12% fxed for duration of agreement with a 7.9% apr
  • Eco_Miser
    Eco_Miser Posts: 4,708
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    Carmk2008 wrote: »
    Still pretty new to investments, reason I thought shares are riskier as you could lose it all whereas at least with the buy to let you still have a property.
    You could certainly lose it all with shares in a single company, but funds with a well diversified portfolio, like Vanguard Lifestrategy would require the collapse of the capitalist system to lose that much, although a 50% drop (followed by a 100%+ rise) can be expected every 10 years or so.

    With a buy to let, the tenant, or a runaway tanker, could trash the place to the extent that the cost of clearing the rubble exceeds the value of the land - let's hope the insurance covers it.
    Eco Miser
    Saving money for well over half a century
  • Carmk2008
    Carmk2008 Posts: 157 Forumite
    So from the options above what looks the best option? The season I think the car is I have to pay that every month whereas if I clear it I can put that money to work elsewhere but at the same time under no obligations if things are tight.
  • bigadaj
    bigadaj Posts: 11,531
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    Carmk2008 wrote: »
    So from the options above what looks the best option? The season I think the car is I have to pay that every month whereas if I clear it I can put that money to work elsewhere but at the same time under no obligations if things are tight.

    Waht rate is your mortgage and are you affected by the upcoming changes to tax relief in buy to let property?

    On the balance of probability then I'd probably pay down the car debt, at nearly 8% it's above the typical long term return for stockmarkets.
  • Carmk2008
    Carmk2008 Posts: 157 Forumite
    bigadaj wrote: »
    Waht rate is your mortgage and are you affected by the upcoming changes to tax relief in buy to let property?

    On the balance of probability then I'd probably pay down the car debt, at nearly 8% it's above the typical long term return for stockmarkets.
    The mortgage rate is just slightly over 3% and it stays pretty much the same if we take the equity out, i am not a high tax payer and my partner doesn't earn enough to pay tax so the changes shouldn't affect us to much and i tend to agree about the car as now
    I think about it i really don't want to pay £240pm for 5 years.
  • AnotherJoe
    AnotherJoe Posts: 19,622
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    Just to add to the uncertainty there's your pension as well, what are you doing there ?
  • Carmk2008
    Carmk2008 Posts: 157 Forumite
    AnotherJoe wrote: »
    Just to add to the uncertainty there's your pension as well, what are you doing there ?
    Only paying the minimum into the workplace pension at the moment but will be increasing this in the very near future.
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