Is this a good idea or not!!!!

roswell

ukbondraider wrote:

I would pay your current mortgage completely off and then buy a nicer new place which you can afford with your salary, rent your old place out and use the rental income for the mortgage of your new place. You should then use your salary to overpay as much as possible but where there are periods that your rental place isnt producing any rent then you have the means to cover it with your salary.

You can do a similar thing with your let to buy but it just means it is slightly riskier. The above should be more sensible something you need to be in the current climate.

EH ?? thats pointless, if he wanted to move somewhere else he should get a BTL mortgaged for 85 % on the value of the porperty and use that as a deposit, This is tax deductable from rental income ... seems a silly move to pay off a mortgage to rent the house out when he could use the capital already in the house.

roswell

OP,

if you can keep your savings above mortgage rate do it, if you worry about job security pay savings into the mortgage, if your willing to take some risk speak to a IFA and take on some fund investments with your savings you could also do a combination of the above eg 15 K off the mortgage , 6 K savings and 4 K stocks and shares ISA investment.

wuzzbert

My mortgage is fixed at 4.25% till dec 2008 amd im tied in!!

I can see its obvious to stay put even with a savings account till 2008!!

Here is my plan:

In dec 2008 im going to re-mortgage and pay an extra 15k of my mortgage but reduce my years left to pay by keeping my payments the same, i pay £320 a month and have 17 years left!

Then I'm going to invest the 10k, 3k mini isa, 7k stock market.

How does this sound and what can I do till dec 2008?

jonesMUFCforever

Have you made a capital gain over and above the £8700 (Around there anyway) figure this tax year? If so you could be hit with a Capital gains tax charge.
Bear this in mind before spending/investing the money!

jonesMUFCforever

Have you made a capital gain over and above the £8700 (Around there anyway) figure this tax year? If so you could be hit with a Capital gains tax charge.
Bear this in mind before spending/investing the money!

wuzzbert

No I made sure the capital gains was under as I did it across two tax years!

Can anyone though please read my last post up and help me decide!!!!

prudryden

RE: "How does it sound?"
Sounds good except my inclination would be to reduce the payments and leave the mortgage maturity years the same. My reason is that I may want to remortgage at a later stage in life and it would be easier if you already have a mortgage albeit a little one. Strictly a personal decision.

RE: "What can I do until Dec 2008?"

Still would invest in Real Estate Investment Trusts. No hassle with tenants, contracts, repairs, void periods, court cases, emergencies, the 70 odd regulations. Excellent dividends in the form of rent payments and capital gains payments at the end of the year. The tax form is easier. No need to become a sole trader etc. and keep all your expense receipts.

pioneer

dunstonh wrote:

You have come out of an equity investment at a time when equities are not considered to be overvalued but are considering an investment area that is considered to be overvalued.

Doubling your money in 5 years isn’t very lucky. Anything above 70% is what you would expect for that period on a medium risk or higher investment (5 years to end October was 62% for sector average returns only).

Whilst I agree that the market property is overvalued, I am bemused as to what sensible individual considers the equity markets to offer great value other than those with vested interest. Indices are currently at relatively high levels and offer a high level of downside as well ! Depends on your measuring stick I suppose.

Selling is always difficult, you did the right thing to lock in some profits, selling half your holdings may have been an option if you want to hedge your bets and haven't anything better planned for the money & like the risk.

You did well to double your money in five years,:T as you and I both know you don't get there in a straight line. If I could double my money "reasonably safely" every five years, I'd hang up my boots and go on permanent holiday

Well done, but make sure you don't give it back to them, VALUE can be hard to find out there at the moment.

dunstonh

Whilst I agree that the market property is overvalued, I am bemused as to what sensible individual considers the equity markets to offer great value other than those with vested interest. Indices are currently at relatively high levels and offer a high level of downside as well ! Depends on your measuring stick I suppose.

Indices are not all at high levels and there modern investing doesnt mean you stick everything on one stockmarket fund as was so often the failure in the past. Many indices are trading in line with long term average growth values and some are below.

Even if you invested in 2001 before the crash, you would have returned 62.7% with a medium risk portfolio achieving just sector average (so no stock picking to get higher returns). Many properties havent managed that return in the same period. (higher risk portfolios were a bit better)

Those portfolios would have had property within them so you still obtain exposure to a range of markets and areas.

pioneer

dunstonh wrote:

Indices are not all at high levels and there modern investing doesnt mean you stick everything on one stockmarket fund as was so often the failure in the past. Many indices are trading in line with long term average growth values and some are below.

Even if you invested in 2001 before the crash, you would have returned 62.7% with a medium risk portfolio achieving just sector average (so no stock picking to get higher returns). Many properties havent managed that return in the same period. (higher risk portfolios were a bit better)

Those portfolios would have had property within them so you still obtain exposure to a range of markets and areas.

Hindsight is a wonderful thing as is perfect market exit and entry timing.

Assuming property has been overdone other than a fools rally and upside is limited, which markets/sectors/funds do you seriously think provide 5 yr 100% growth potential with limited risk, and remember I hate catching falling knives.:rotfl: