PLEASE READ BEFORE POSTING

Hello Forumites! In order to help keep the Forum a useful, safe and friendly place for our users, discussions around non-MoneySaving matters are not permitted per the Forum rules. While we understand that mentioning house prices may sometimes be relevant to a user's specific MoneySaving situation, we ask that you please avoid veering into broad, general debates about the market, the economy and politics, as these can unfortunately lead to abusive or hateful behaviour. Threads that are found to have derailed into wider discussions may be removed. Users who repeatedly disregard this may have their Forum account banned. Please also avoid posting personally identifiable information, including links to your own online property listing which may reveal your address. Thank you for your understanding.

Paid off mortgage but now what?

Options
Gori
Gori Posts: 14 Forumite
First Post First Anniversary Combo Breaker
in House buying, renting & selling
Hi my dear MSEF peeps,

I'm happy to report that I've paid off my mortgage thanks to the monthly over-payment tactic
promoted by our very own Mr Lewis and I'm obviously over the moon cause of it :rotfl:

However, I'm now faced with dilemma as we would love to buy a bit bigger property to move to and keep the first one as a rental option. The first property mortgage was in my name as hubby's self employed. As currently mortgage free, we are not too keen on taking again huge loans so not sure what's the best way to approach this.

I'm hoping for some suggestions and tips in order to help me start this new 'project'.

Cheers,

Gori
*Reclaimed £110 remortgage fees :j
**Reclaimed ££££ from Barclays PPI :T
«1

Comments

  • Crashy_Time
    Crashy_Time Posts: 13,386 Forumite
    First Anniversary First Post Name Dropper
    Options
    Gori wrote: »
    Hi my dear MSEF peeps,

    I'm happy to report that I've paid off my mortgage thanks to the monthly over-payment tactic
    promoted by our very own Mr Lewis and I'm obviously over the moon cause of it :rotfl:

    However, I'm now faced with dilemma as we would love to buy a bit bigger property to move to and keep the first one as a rental option. The first property mortgage was in my name as hubby's self employed. As currently mortgage free, we are not too keen on taking again huge loans so not sure what's the best way to approach this.

    I'm hoping for some suggestions and tips in order to help me start this new 'project'.

    Cheers,

    Gori


    Don`t. Just be glad you are free of the debt monster.
  • Chanes
    Chanes Posts: 882 Forumite
    First Anniversary First Post Combo Breaker
    Options
    Don't move! Extend or improve your mortgage free home...you will not enjoy having a mortgage again, not one bit, and you will go mad trying to get rid of it just for a bigger house!
  • glasgowdan
    glasgowdan Posts: 2,967 Forumite
    First Post First Anniversary Combo Breaker
    Options
    Upsizing can be a sound investment and worth considering. As for becoming a landlord... that's a choice that may or may not drive you to distraction!
  • AnotherJoe
    AnotherJoe Posts: 19,622 Forumite
    First Anniversary Name Dropper First Post Photogenic
    Options
    Gori wrote: »
    Hi my dear MSEF peeps,

    I'm happy to report that I've paid off my mortgage thanks to the monthly over-payment tactic
    promoted by our very own Mr Lewis and I'm obviously over the moon cause of it :rotfl:

    However, I'm now faced with dilemma as we would love to buy a bit bigger property to move to and keep the first one as a rental option. The first property mortgage was in my name as hubby's self employed. As currently mortgage free, we are not too keen on taking again huge loans so not sure what's the best way to approach this.

    I'm hoping for some suggestions and tips in order to help me start this new 'project'.

    Cheers,

    Gori

    Post the financial analysis you've done that shows the new mortage, the rental income, the costs, and how that all looks
  • eddddy
    eddddy Posts: 16,449 Forumite
    First Anniversary First Post Name Dropper
    Options
    Gori wrote: »
    As currently mortgage free, we are not too keen on taking again huge loans so not sure what's the best way to approach this.

    To buy another property, you either need to pay cash or get a mortgage - there aren't really any other options.


    And obviously, the biggest mortgage you could realistically get would be 90% LTV, so you'd need enough cash to cover at least 10% deposit (plus buying costs).
  • booksurr
    booksurr Posts: 3,700 Forumite
    Options
    you cannot buy another property without either getting a mortgage or paying from your own cash savings, surely you know that so what actually is your question?

    why do you think your current property would make an ideal rental property?

    from what you have posted your lack of available finance means you are nothing more than a dreamer
  • Hoploz
    Hoploz Posts: 3,888 Forumite
    Options
    I can't see why everyone's being so harsh on the OP. People do this all the time. Well done for clearing the mortgage.

    If you want to do it then just look into the figures and see if it's viable.

    Obvs some sort of mortgage is probably going to be required. It's up to you how much debt you're happy to take on, in relation to your income.

    I would agree, however, that if you've previously had paying off the mortgage as a priority in your mind, it seems a litte odd to be considering starting from scratch again. You'd be wise to ensure there is plenty of profit in it, to ensure costs (and contingencies) are well and truly covered. And the likelihood of it being a fantastic earner month-to-month are quite slim. You'd be clever to pull off a big profit from rental income if you're mortgaged to the hilt. It's often the case that landlords just about cover operating costs, and the profit is made by selling later on, benefitting from house price inflation over a long period.
  • Kynthia
    Kynthia Posts: 5,668 Forumite
    First Post First Anniversary Combo Breaker
    Options
    You should first do some proper research into what being a landlord means and whether your current property is a good financial option as a rental. Often your current hone isn't the best choice of rental plus people tend to be too emotionally attached to it that thry become upset when it stops looking like their old home and becomes someone else's or gets unloved by renters.

    Then you'll need to borrow lots to buy a second property and pay the second home higher stamp duty. Have you checked with a broker tgat you pass tge affordability to do this? Have you both been paying into pensions, especially as being self employed you won't have any employers contributions, or has this been sacrificed for becoming mortgage free? Maybe see if your retirement saving is on track?
    Don't listen to me, I'm no expert!
  • beanandbean
    beanandbean Posts: 128 Forumite
    Options
    Hoploz wrote: »
    I can't see why everyone's being so harsh on the OP. People do this all the time. Well done for clearing the mortgage.

    If you want to do it then just look into the figures and see if it's viable.

    Obvs some sort of mortgage is probably going to be required. It's up to you how much debt you're happy to take on, in relation to your income.

    I would agree, however, that if you've previously had paying off the mortgage as a priority in your mind, it seems a litte odd to be considering starting from scratch again. You'd be wise to ensure there is plenty of profit in it, to ensure costs (and contingencies) are well and truly covered. And the likelihood of it being a fantastic earner month-to-month are quite slim. You'd be clever to pull off a big profit from rental income if you're mortgaged to the hilt. It's often the case that landlords just about cover operating costs, and the profit is made by selling later on, benefitting from house price inflation over a long period.
    I think people are being harsh because the OP is contradicting themselves in their first post and not really asking a clear question.
  • teddysmum
    teddysmum Posts: 9,471 Forumite
    First Anniversary Combo Breaker First Post
    Options
    We paid off our mortgage in the early years of our marriage and have never been tempted to take on another. It's good to know that your money is no longer committed and that you are no longer at the mercy of rising interest rates (Our mortgage was in the 17% days).


    The mortgage was a necessity, if we were to own our own house, but calculating what you actually pay, as opposed to the sale price of the property , can be a real turn off against further voluntary debt.
This discussion has been closed.
★ ★ ★ Meet your Ambassadors

Categories

  • All Categories
  • 343.3K Banking & Borrowing
  • 250.1K Reduce Debt & Boost Income
  • 449.7K Spending & Discounts
  • 235.3K Work, Benefits & Business
  • 608.1K Mortgages, Homes & Bills
  • 173.1K Life & Family
  • 248K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 15.9K Discuss & Feedback
  • 15.1K Coronavirus Support Boards