Is it worht paying off mortgage early or get another house??

Stoner2006

Hi all,

Before I start what an excellent website ;-)

I’ll keep things nice and simple for you all the form is as follows – work is going well and I have extra cash available which I want to put into either my mortgage or a 2nd home to put on lease…..

The form is as follows:

• House value = £185000
• Mortgage value = £65000
• Term remaining = 23 years
• Each month I can save an extra = £1000

Am I better off paying of my mortgage early by £1000 every month “whilst” I can and if so what impact would it have please?

Also another thought……

Would I be wise to re-invest the equity in my house (£120,000) and then go out and get another mortgage and buy a buy to let property to put on rent and then long term save the property to pay the mortgage off on the property above?

Stoner2006…

canny_yorkshireman_2

nice to have that amount of spare cash available evry month i would do this maximise your isa allowence and then check that overpayments are allowed on your mortgage if they are without penalty check on when the interest is credited daily or yearly as the latter would not attract any value till the year end better to stick the overpayments in a high interest account then transfer at the year end cannot give any advice as to investing in another property as you are well aware that the market could well go down as well as up so stick to the safe bet and reduce the debt
hth

ReportInvestor

Hi Stoner,

You're basically asking if we think the property market is going to continue going up - and/or if the stock market will go up more.

If that's "nice and simple" I'll eat my hat .

I think that's up to you to decide after reading the site, and not for anyone in their right mind to recommend.

My thoughts? Paying off debt is rarely bad and there are always worse ways to go. The alternatives you have to decide for yourself.

Stoner2006

Wow some realy quick responses there many thanks :-)

A bit more info i have a standard life Freestyle mortgage that allows me to overpay either monthly or in one lump sum where before the tax year kicks off they dump my money into the mortgage and recalculate from there onwards.

I also have an offset reserve account where i can leave money in a savings pot with standard life that goes towards my mortgage balance....

Hope the above provides some further info?????

What my dilema really is - is do I overpay my mortgage by say £10,000 per annum and in 5-6 years time have a freehold property?

My wife is planning on kids in the next 2-3 years so i am desperatly trying to come up with a plan to get rid of as much of my mortgage repayments as possible so it will be easier to cope on 1 salery.

In terms of loans etc I've been a good boy and pay off my credit card bill every month with no loans of any sort apart from my mortgage of course ;-)

The reason for asking re the 2nd home was that many people have said that maybe it may prove to be more fruitfull to release the equity in my house and get a house on buy to let that would effectively pay itself and then years down the line i have a nice nest egg to sell?

Another interesting point I have on my mind is the term of the mortgage - bearing in mind that I (hope) to clear my mortgage early would it make sense to EXTEND my mortgage term to 30 years so my monthly repayments are even lower and then to save the difference on top of the £1000 to chip away at the total oustanding balance even quicker????

I'm at a deciding point in my life and every bank/financial advisor I speak to always seem to have an alterior motive :-(

I know if i play my cards right - right now I could set myself up nicely for the future hence hoping to tap into all of your knowledge and expertise in this field .....

Dont worry I wont make any decisions without looking into things in more detail but nudges in the right direction(s) would be most appreciated.....

tomstickland

Another interesting point I have on my mind is the term of the mortgage - bearing in mind that I (hope) to clear my mortgage early would it make sense to EXTEND my mortgage term to 30 years so my monthly repayments are even lower and then to save the difference on top of the £1000 to chip away at the total oustanding balance even quicker????

If you had a savings rate higher than the mortgage rate then yes it would. This is very unlikely, so you're best of paying off as much as the mortgage as possible as quickly as possible.

Personally I'd overpay and invest some of the extra money into unit/investment trusts. Not another property.

brranger

I also have an offset reserve account where i can leave money in a savings pot with standard life that goes towards my mortgage balance....

Insted of paying extra payments could you not just put in here as it has the same effect on the mortgage, but you still have the cash at the end of the day. bonus

Safety net for the future change in circumstance like Baby etc:

Ranger