mortgage or no mortgage?

PosterBoy77

I see what you are saying, but it all seems to come down to the size of the mortgage. If you can get a small enough mortgage then you would be paying much less in interest (for the few years that you have the mortgage) than you if you were to rent. Then at the end of that short period of time the property is yours. Hopefully when you eventually sell it will have at least gained some value giving you gains on the capital amount paid originally. This has to beat, paying the going rate for rent year on year ?

Well that can also depend on how much you could make from investing any cash tied up in your property elsewhere. For example, if you bought a 200k property with a 200k mortgage and paid £1k per month in interest, you could say it would become cheaper if you only had a 100k mortgage costing £500 per month in interest payments. However you are keeping 100k tied up which could be earning interest or providing an investment return. In your example it may be just as likely that if you only paid rent but got a return on the 100k that you may be able to do just as well with less risk.

The property would only become yours with a repayment mortgage so you would need to ensure you compare rent payments and investment returns with a repayment mortgage and not an interest only one.

However as you can see, there is no one single answer and all the variables need to be factored together. A lot depends on you feel house prices will do, the level of rents and interest rates!

vansboy

hughgallagher wrote: »

ok, that's interesting ... I've not heaqrd of that being done before.
Did you place the proceeds of your original sale on the house into the savings account on the offset and then borrow against the savings? (Just trying to work out if I can do that too.) (I actually have a "IF" plan but just have an mini ISA in the plan.)

We chose the Offset as a secondary mortgage, possibly converting to buy to let, at a future stage - plan is to buy another house & keep the flat, but you never know what the future brings!!

Until then, we've the bulk of the procedes from the house sale in ING bank, with a seperate amount, just a couple of hundred ££ more than what is the mortgage balance, in the Offset account (not ING).

VB

PosterBoy77

hughgallagher wrote: »

ok, that's interesting ... I've not heaqrd of that being done before.
Did you place the proceeds of your original sale on the house into the savings account on the offset and then borrow against the savings? (Just trying to work out if I can do that too.) (I actually have a "IF" plan but just have an mini ISA in the plan.)

It could be possible to use an offset mortgage and borrow company money to offset against for most of each year. However, if HMRC ever took a look at your company affairs they would probably charge you tax on the benefit in kind and also your company for making a loan to you. Not something I could recommend to anyone, but some people may be prepare to take a gamble.