Mortgage Free in 3 years?

JonnyTwoToes

I like a challenge!

Currently got two mortgages:

1) £53k on flat we rent out (worth £90k)

2) £128k on a house we live in (worth £180k)

Saving £2k + at the moment per month

Five year Fixed (5.5%) for the flat finishes April next year and then reverts to Variable (currently 3.9%)

Looking to clear up flat mortgage in two years from April (£2169 a month) to release equity, when sold, to go against house mortgage.

House mortgage is only 0.3% above base for a lifetime tracker so may not pay that off but be nice to have the savings to do so.

Wish me luck!

Engeroosi

So what date you hoping to clear your house mortgage on, if the BoE rate stays low then you are in a great position to build up funds to clear the mortgage once the rates start to rise again.

JonnyTwoToes

Engeroosi wrote: »

So what date you hoping to clear your house mortgage on, if the BoE rate stays low then you are in a great position to build up funds to clear the mortgage once the rates start to rise again.

Yeah, that's the idea really. Saving about £2k a month at the moment so we 'should' be able to clear the mortgage by the time the flat one is clear (£90k + savings).

Having said that, with the mortgage at only 0.3% above base, we may keep the savings and have them build up.

I don't think such a low mortgage will be available again, not in the near future anyway, so I'm happy to keep hold of it.

dimbo61

Not sure if this is the best way!!!
Do you get tax relief on the Interest only part of the mortgage from the flat against your tax on the profit you make from renting ?
If so why pay off the flat!

JonnyTwoToes

dimbo61 wrote: »

Not sure if this is the best way!!!
Do you get tax relief on the Interest only part of the mortgage from the flat against your tax on the profit you make from renting ?
If so why pay off the flat!

Yes, but it's not a huge amount. Interest at £200 a month. Rent income at £400 a month.

Be happier to clear and sell.

dimbo61

Could it be part of your retirement portfolio as you already own the property and its making a profit

JonnyTwoToes

dimbo61 wrote: »

Could it be part of your retirement portfolio as you already own the property and its making a profit

Speaking honestly, I'm a little fed up of being asset rich with little liquidity.

I am liken to a pinball machine with this decision though so next week I'll be wanting to keep it all and buy more property!

dimbo61

Buying and selling costs money so why not build up savings and then op the house

JonnyTwoToes

dimbo61 wrote: »

Buying and selling costs money so why not build up savings and then op the house

The house or the flat?

Flat will be 3.9% variable from April 2012. House is 0.3% above base.

With the flat, I won't get savings at that rate so best to OP every month isn't it? With the house, it is certainly worth building up savings though rather than pay off mortgage, I agree.

dimbo61

You get tax relief on the interest only part of the mortgage cost on the flat so build up savings to clear the mortgage on your home when the time is right

JonnyTwoToes

Another overpayment this month - Down to 53521.10 (32 months left!)