What to do with buy to let profits

jmcbizz

I have two buy to let properties worth approx £450k with an outstanding interest only mortgage of £220k at 2.95%. I pay approx £540 per month in interest payments and receive approx £2000 in rent per month. I do not have a mortgage on my home.The mortgage is a BofE + 1.95% tracker and I have been very fortunate to benef from the recent interest rate reductions. My original intention was to use the profits to repay some of the outstanding loan. However with interest rates so low and stock markets appearing to be at the bottom of major dip I was wondering if it would be more intelligent to invest the profits in the stock market in the expectation that I will get higher returns than the interest rate I pay on the loan.I would be interested in your views on this, particularly how I should split any investments to help spread my risk.

rl290

fatpig wrote: »

If the profits have been made from the sleazy buy to let trade then give the money to charity as partial penance for your sins.

What a stupid post! There is nothing inherently wrong about BTL: in fact, it is useful to society. How else would people who could not afford to/did not want to buy a property live anywhere? Students, young professionals, people who haven't settled down, etc all need BTL investors to supply the market with rental properties.

Of course, like anyone providing a service, a bad BTL investor is a menace for tenants... but there is nothing to indicate the OP is one of these people.

So, I say again: what a stupid post!

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OP, I am in a similar situation to you: spare money with which to either pay off my mortgage or invest in the markets. What I have done is to do a bit of both: I am overpaying my mortgage by a bit each month, while also investing in a S&S ISA. If at the end of this year I have excess money left, I will use it to pay off a lump sum from the mortgage, assuming I have topped by ISA to the max. limit. I personally believe that market investments over the next decade will outdo mortgage interest rates.

The decision you make will depend on your risk tolerence, and what other investments you have in place to pay off your mortgage. It sounds like you are pretty well grounded, with a large amount of equity and income, so may be more tolerant to potential short term losses in the market.

R

socrates

If you are making larger profits you will have a larger tax bill - by paying into your mortgage you will not reduce your tax bill.

Now is the time to do any maintenance that you have put off.

I cannot advise you about investments as nothing seems to be guaranteed at the moment anyway

Decadent_Fool

fatpig wrote: »

If the profits have been made from the sleazy buy to let trade then give the money to charity as partial penance for your sins.

I find that post offensive and ignorant.

As for my profits, I'm overpaying mortgage and dabbling in shares, too