Investing in property

skidder652003

Hi
Would anyone out there help my confused, deliberating mind up!!
Have a second home (holiday rental) with a 23yr repayment mortgage @ 5.19% with 52'000 left to pay and have been left 100'000. Do I pay off the current 5.19 mortgage and use the 48'000 left on a deposit for another house and have say 100'000 mortgage. OR Do I leave the current mortgage as is and put down 100'000 deposit on another property with a smaller mortgage??
The more I think, the more confused I become. Someone with a money brain please help. Thanks.:mad:

andy69_2

I would deffo 150% pay off your first mortgage, then you don't have to worry about paying 2 off. TO me one mortgage is enough! Once you pay one off, at least you can always sell and get your money back when you want!

poppysarah

Pay off mortgage. be Debt free with an income. Live long and prosper.

theartfullodger

Well it all depends on what happens with house prices & interest rates..

You obviously know what house prices are going to do - FK!

Re. Interest rates last time a conservative government came in rates hit 17+% and bounced around above 10% for a couple of years....

Easy to decide on the basis of that input eh??

Cheers!

Lodger

PS (Can one use the interest paid on a mortgage on a holiday let to reduce the profit you make & thus pay less tax?? You can on "normal" Buy2Let properties...)

skidder652003

Thanks guys. Seems like a defo pay offxx

sjcollett

Skidder - out of interest why did you want to buy a second property rather than just paying the debt off to start with? I just ask - as my answer [as a landlord] would be rather different to the above...

I was in your situation not so long ago and I chose the buying another property route rather than paying debt down. was it the right thing? Well it all depends on what you want to achieve - that's why I was wondering?

skidder652003

Hi sj collett. I want to buy a second property to make the most of the capital for long term growth. For kids college and for our pension, as we do not have a private pension and don't think we should rely on the state pension. Would u pay the debt off and start with a smaller deposit or keep the existing debt??
Thanks Skidder

G_M

I would deffo 150% pay off your first mortgage,

If the advice is only 150% then clearly it's uncertain.

I would 200% invest in a 3rd property!

GDB2222

Have a second home (holiday rental) with a 23yr repayment mortgage @ 5.19% with 52'000 left to pay and have been left 100'000. Do I pay off the current 5.19 mortgage and use the 48'000 left on a deposit for another house and have say 100'000 mortgage. OR Do I leave the current mortgage as is and put down 100'000 deposit on another property with a smaller mortgage??

The answer to this is that it depends on the interest rate on the new mortgage.

Option 1 is pay off the £52k old mortgage but borrow £52k more on the new one

Option 2 is leave the £52k old mortgage but don't borrow £52k more on the new one

You're borrowing the same amount either way.

Option 3 is pay off the old mortgage and put £48k in the bank. You're not earning much interest, but it's worry-free.

PasturesNew

You need a spreadsheet really because interest on the mortgage can be offset against your tax liability of income from the holiday home.

You need to play around with the figures and see what's best.