Hypothetical scenario

Peater · 10 December 2011 at 8:22AM

So, say you could afford to buy your first property outright and still have, let's say, £40k left over.

Would you still get a small mortgage (£25k min) to (a) free up more cash for the next project and (b) get yourself a decent credit rating for the future?

Or would you do away with the idea of a mortgage all together and worry about it for the next property? I guess not having a mortgage on the first property opens up your options to renting etc a little easier too.

Thoughts?

DVardysShadow · 10 December 2011 at 9:27AM

Peater wrote: »

So, say you could afford to buy your first property outright and still have, let's say, £40k left over.

Would you still get a small mortgage (£25k min) to (a) free up more cash for the next project and (b) get yourself a decent credit rating for the future?

Or would you do away with the idea of a mortgage all together and worry about it for the next property? I guess not having a mortgage on the first property opens up your options to renting etc a little easier too.

Thoughts?

Credit ratings are for the little people. If you own property outright, have an income which you live within and you don't get yourself mobile phone defaults and the like, you will always have more funds available to you than are good for you. More so now, because they don't lend to the little people and are struggling to find others to lend to.

BitterAndTwisted · 10 December 2011 at 10:05AM

I'd buy a property outright to live in and find another, less risky and time-consuming home for my investment funds.

FireWyrm · 10 December 2011 at 10:53AM

If yu can buy it outright, buy it. It makes no sense to pay interest on borrowing when you don't have to. If you want to play around with your credit rating, get a credit card, buy stuff and pay it off in full every month, it will have the same effect. The very act of homeownership will improve your rating anyway. Don't take on debt you dont have to, things could always change on the future and you could find yourself out in the cold with no parachute. Personally, I would be looking to put my money somewhere solid and safe and it might be worth paying an accountant to give you some advice. Solid gold like bullionvault is a good option. Don't try gold stocks, bonds or anything else that isn't solid. If you must put it in a bank, spread it around, don't put all your eggs in one basket, that way, if the banks go down, you're unlikely to lose it all at once.