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  • FIRST POST
    • Gori
    • By Gori 18th Sep 16, 6:03 PM
    • 13Posts
    • 0Thanks
    Gori
    Paid off mortgage but now what?
    • #1
    • 18th Sep 16, 6:03 PM
    Paid off mortgage but now what? 18th Sep 16 at 6:03 PM
    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

    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
    **Reclaimed ££££ from Barclays PPI
Page 1
    • Crashy Time
    • By Crashy Time 18th Sep 16, 6:11 PM
    • 2,640 Posts
    • 1,614 Thanks
    Crashy Time
    • #2
    • 18th Sep 16, 6:11 PM
    • #2
    • 18th Sep 16, 6:11 PM
    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

    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
    Originally posted by Gori

    Don`t. Just be glad you are free of the debt monster.
    • Chanes
    • By Chanes 18th Sep 16, 6:29 PM
    • 458 Posts
    • 270 Thanks
    Chanes
    • #3
    • 18th Sep 16, 6:29 PM
    • #3
    • 18th Sep 16, 6:29 PM
    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
    • By glasgowdan 18th Sep 16, 6:40 PM
    • 1,239 Posts
    • 1,324 Thanks
    glasgowdan
    • #4
    • 18th Sep 16, 6:40 PM
    • #4
    • 18th Sep 16, 6:40 PM
    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
    • By AnotherJoe 18th Sep 16, 6:46 PM
    • 3,496 Posts
    • 3,551 Thanks
    AnotherJoe
    • #5
    • 18th Sep 16, 6:46 PM
    • #5
    • 18th Sep 16, 6:46 PM
    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

    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
    Originally posted by Gori
    Post the financial analysis you've done that shows the new mortage, the rental income, the costs, and how that all looks
    • eddddy
    • By eddddy 18th Sep 16, 6:47 PM
    • 3,536 Posts
    • 3,186 Thanks
    eddddy
    • #6
    • 18th Sep 16, 6:47 PM
    • #6
    • 18th Sep 16, 6:47 PM
    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.
    Originally posted by Gori
    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
    • By booksurr 18th Sep 16, 6:52 PM
    • 2,898 Posts
    • 3,331 Thanks
    booksurr
    • #7
    • 18th Sep 16, 6:52 PM
    • #7
    • 18th Sep 16, 6:52 PM
    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
    • By Hoploz 18th Sep 16, 7:10 PM
    • 2,785 Posts
    • 2,490 Thanks
    Hoploz
    • #8
    • 18th Sep 16, 7:10 PM
    • #8
    • 18th Sep 16, 7:10 PM
    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
    • By Kynthia 19th Sep 16, 7:29 AM
    • 4,441 Posts
    • 6,404 Thanks
    Kynthia
    • #9
    • 19th Sep 16, 7:29 AM
    • #9
    • 19th Sep 16, 7:29 AM
    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
    • By beanandbean 19th Sep 16, 8:56 AM
    • 115 Posts
    • 94 Thanks
    beanandbean
    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.
    Originally posted by Hoploz
    I think people are being harsh because the OP is contradicting themselves in their first post and not really asking a clear question.
    • teddysmum
    • By teddysmum 19th Sep 16, 2:39 PM
    • 5,111 Posts
    • 3,114 Thanks
    teddysmum
    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.
    • vw100
    • By vw100 19th Sep 16, 4:53 PM
    • 85 Posts
    • 26 Thanks
    vw100
    With tax changes being implemented for Landlords fully by 2020 and the extra levy of stamp duty, BTL is becoming unattractive broadly speaking, especially for small landlords or for those who have little equity. On rightmove especially in the London area there has been an increase that I have noticed of ex-rental property's for sale. With local authority licencing and some rumours linking that register to HMRC it is looking rather grim for those few tax evading landlords (not making judgements that you are). Reading a website which I cannot remember, there was a mention there should be a swing to large institutional landlords rather small one man band type of landlords. Something to ponder over.


    If you want to buy a second house, do the maths, save the money from not paying the mortgage and see what it like in a few years time - who knows what will happen to the property market.
    • dimbo61
    • By dimbo61 19th Sep 16, 5:12 PM
    • 9,091 Posts
    • 4,949 Thanks
    dimbo61
    Second Home
    Without knowing where you live, how much you both earn, savings, pensions, age and future plans know one can say if buying a second property is a good idea or Not!
    Your husband might be a builder with a brother who is a bricklayer and sister who does Interior design.
    The run down property next door might be up for auction next week at £25K due to years of decay or neglect.
    Time to do some research yourself into the local housing/rental market !
    • Gori
    • By Gori 22nd Sep 16, 8:54 PM
    • 13 Posts
    • 0 Thanks
    Gori
    Thanks for all your comments and suggestions - All much appreciated.
    I'm definitely not going to jump into BTL waters without making a lot of research and calculations first. Unless there's indeed a run down property next door up for auction at £25K

    Research and calculations approach got us where we are now - mortgage free - something we were dreaming of for years. So I don't see anything wrong in being a dreamer. From my experience, good ideas are often result of a well thought off process, brought to life as a result of someone's dream
    Will keep you posted x
    *Reclaimed £110 remortgage fees
    **Reclaimed ££££ from Barclays PPI
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