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    • Carmk2008
    • By Carmk2008 20th Mar 17, 8:09 PM
    • 121Posts
    • 27Thanks
    Carmk2008
    What to do?
    • #1
    • 20th Mar 17, 8:09 PM
    What to do? 20th Mar 17 at 8:09 PM
    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.
Page 1
    • jimjames
    • By jimjames 20th Mar 17, 11:24 PM
    • 11,788 Posts
    • 10,145 Thanks
    jimjames
    • #2
    • 20th Mar 17, 11:24 PM
    • #2
    • 20th Mar 17, 11:24 PM
    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.
    Originally posted by Carmk2008
    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
    • By Carmk2008 21st Mar 17, 9:19 AM
    • 121 Posts
    • 27 Thanks
    Carmk2008
    • #3
    • 21st Mar 17, 9:19 AM
    • #3
    • 21st Mar 17, 9:19 AM
    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
    • By Carmk2008 21st Mar 17, 9:28 AM
    • 121 Posts
    • 27 Thanks
    Carmk2008
    • #4
    • 21st Mar 17, 9:28 AM
    • #4
    • 21st Mar 17, 9:28 AM
    Should also add the car is 4.12% fxed for duration of agreement with a 7.9% apr
    • Eco Miser
    • By Eco Miser 21st Mar 17, 9:56 AM
    • 2,800 Posts
    • 2,592 Thanks
    Eco Miser
    • #5
    • 21st Mar 17, 9:56 AM
    • #5
    • 21st Mar 17, 9:56 AM
    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.
    Originally posted by Carmk2008
    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
    • By Carmk2008 21st Mar 17, 10:03 AM
    • 121 Posts
    • 27 Thanks
    Carmk2008
    • #6
    • 21st Mar 17, 10:03 AM
    • #6
    • 21st Mar 17, 10:03 AM
    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
    • By bigadaj 21st Mar 17, 7:10 PM
    • 8,989 Posts
    • 5,721 Thanks
    bigadaj
    • #7
    • 21st Mar 17, 7:10 PM
    • #7
    • 21st Mar 17, 7:10 PM
    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.
    Originally posted by Carmk2008
    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
    • By Carmk2008 21st Mar 17, 7:53 PM
    • 121 Posts
    • 27 Thanks
    Carmk2008
    • #8
    • 21st Mar 17, 7:53 PM
    • #8
    • 21st Mar 17, 7:53 PM
    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.
    Originally posted by bigadaj
    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
    • By AnotherJoe 21st Mar 17, 8:06 PM
    • 6,295 Posts
    • 6,667 Thanks
    AnotherJoe
    • #9
    • 21st Mar 17, 8:06 PM
    • #9
    • 21st Mar 17, 8:06 PM
    Just to add to the uncertainty there's your pension as well, what are you doing there ?
    • Carmk2008
    • By Carmk2008 21st Mar 17, 9:43 PM
    • 121 Posts
    • 27 Thanks
    Carmk2008
    Just to add to the uncertainty there's your pension as well, what are you doing there ?
    Originally posted by AnotherJoe
    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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