Mortgage or cash

philproc

I have a dilemma

Whichever way I do the sums I reckon I am better using my capital to buy a flat to 'let-out' outright.

The property is £75k

Income £400/month.

working out over 20 years with todays rates I think I would be much better off buying cash.

I have taken into account as much detail as I can. Tax relief on mortgage interest. Income tax etc. still at 22% in joint names etc. CGT, very conservative house price raises.

QUESTION
Am I missing a trick? appart from using up capital.

Of course your average mortgage broker will advise as much mortgage as he could get away with.

Anyone else have any thoughts?

Thanks

stanmoresaver

philproc wrote:

Of course your average mortgage broker will advise as much mortgage as he could get away with.

Why do you say that then?

MortgageMamma

Define average mortgage broker?

silvercar

You need to compare the interest you could get on the £75k if you invested it elsewhere plus the profit you would make on the buy-to-let with a large mortgage to the profit you would make by investing the £75k in a BTL allowing for the interest payments being a tax deductable expense.

You are right to consider the whole picture not just the tax benefit but do remember that the money will be working for you elsewhere if it is not invested in a property.

philproc

MortgageMamma wrote:

Define average mortgage broker?

I can only define average mortgage broker of course by my own experience. I have probably spoken to eight in the last few months. They obviously vary in opinion but ALL without fail asked me to take out more mortgage than I origionaly sought. I may have a suspicious mind of course, but when questioned in differing approaches I can only deduce that apart from the 'fee only' seeking ones they where the ones who would benefit rather than me.

No disrespect to brokers I have not dealt with but that is may humble opinion.

As for the capital working for me in other places, I can only work on what I am prepared to gamble with therefore I didn't use unrealistic get rich quick schemes.

What I was hoping for on here was a fair unbiased opinion as to peoples thoughts on the merits of cash purchase over mortgage. I have almost convinced myself, but reasurance would be great :T


Thanks again

stanmoresaver

philproc wrote:

. Of course your average mortgage broker will advise as much mortgage as he could get away with.

philproc wrote:

What I was hoping for on here was a fair unbiased opinion as to peoples thoughts on the merits of cash purchase over mortgage.

Well then, posting in this manner on a board where a significant number of the contributors are both mortgage brokers and obviously unbiased (because they have nothing to gain)- it's probably not the best way to get what you want.

Nuff said :lipsrseal :lipsrseal

MortgageMamma

sorry you feel you have had a rough ride with mortgage brokers in the past. we don't mean to be rude or disrespectful, but nothing winds a genuine hard working broker up more than being typecast as someone that will just sell to you unecessarily or even worse someone that will offer advice that is not in your best interests. We give our time for free on here with nothing to gain but the satisfaction of knowing that we have educated and informed the non qualified posters to make better decisions with their finances. I hope now I've explained our feelings you will feel better towards mortgage brokers. find yourself a good one and stick with him/her for life

philproc

stanmoresaver wrote:

Well then, posting in this manner on a board where a significant number of the contributors are both mortgage brokers and obviously unbiased (because they have nothing to gain)- it's probably not the best way to get what you want.

Nuff said :lipsrseal :lipsrseal

That's the very reason I posted on here in the first place, hoping to get some unbiased advise. I can only recount my experiance to date. I was hoping that my faith could be restored. I apologise if I have sterotyped the mortgage broker profession but until I manage to find some clear unbiaed guidance I am stuck.

Look at the first post, perhaps I was a bit heavy handed and should have just asked the question Cash or mortgage.

Perhaps I will just have to go with my own sums and take my risk in my own hands.

Again apologies if I anoyed anyone and thanks for the advise

silvercar

As for the capital working for me in other places, I can only work on what I am prepared to gamble with therefore I didn't use unrealistic get rich quick schemes

Stick it in a high interest savings account and you should get 5% (less after tax). Low risk and you should be including this in your calculations.