Save For Deposit Or Pay Off Capital

PJGILL

Hello All,

I have three Buy to let properties that are all rented out and generating more income that expenditure at the moment. Due to the current house price fall they are losing some equity so my plan of selling one of them t help buy a house in medium term is on hold.

I am now considering saving (£1000pm) to help with a deposit rather than paying of capital on any of the mortgages. Is this a sensible idea?

Kaz2904

It all depends on the interest rate you can receive on your savings against the interest rate you are paying on your mortgages. You also need to factor in what you would lose from your tax allowance vs the tax you'll pay on your savings interest. HTH, Kaz.

PJGILL

I was also thinking that now might be a good time to release some of the capital from the mortgage. E.g. If i had 500000 in equity tied up in the mortgage at the moment and the prices dropped by another 10% then in a year i will have only 40000 capital. If i am able to take the capital out then in a year i will have 50000 + a little interest.
This assumes that over the same year my rent income continues to cover my now increased mortgage payments. I think my logic is ok but am looking for advice.

andy-1_3

It all depends on the interest rate you can receive on your savings against the interest rate you are paying on your mortgages.

I think when you compare it you will get the best answers. cos we dont know how much your tax bill and the interest rate. so try compare it and that will give u the best idea. hope it help.