I can afford to - Should I repay my mortgage ?

working_mum_3

Dear All,

I am a reluctant landlord for 4 years due to living overseas. My UK house has roughly a 150K mortgage, repayment at around 1500 per month. For the past 4 years the house has been rented out to cover mortgage repayments. The rent has covered this, plus expenses but has not revealed a profit - hence no tax has been due. The interest on the mortgage has been a chunky expense in that it has helped in the overall scheme in that no tax has needed to be paid - although returns have been submitted yearly.

I have the money to repay the mortgage. I have no other certain plans that I will need this money for. Should i repay the mortgage, but then lose the mortgage interest as an expense ? If I did this - surely it would mean a rental profit and therefore tax to be paid and I would be worse off ?

I cannot remortgage because I am not UK resident, so I believe i have to stick with this variable rate mortgage. My cash is currently earning 2.75% interest off shore.

Advice please.

Marine_life

You need a tax expert to look at the realtive merits of paying the mortgage off. What rate are you paying on the mortgage? It seems quite high based on the interest you are talking about.

But you should be able to do better than 2,75% on your savings. Is this a regular variable rate or have you tied up the savings for a period of time? Do you have your savings in sterling or another currency?

If you are prepared to tie up part of your savings for longer then you should be able to get 4% or better.

Depending on your attitude to risk you may want to consider a more aggressive set of investments.