Mortgage Dilema

Bloomer

I am fortunate to be able consider buying a buy to let property. It will cost approx 115k with a potential income of £600 per month. I can raise approx 100k. Should I get a repayment mortgage for approx 25k over 10 years and have some cash in hand or put the full 100k in and get a loan over 2 years costing approx £663.00 per month, which would mean I would own it outright in 2 years. I suppose there may be some tax benefits to having a mortgage but unsure if this would outweigh the outright ownership solution. My age which is a touch over sixty may have some baring on which way to go. I will need to make an offer soon so need some urgent advice. Thanks

Conrad

A mortgage will have a lower interest rate, but fees would be due and therefore have to be considered. You could simply do an interest only on a scheme with no penalty for full repayment in 2 years time. Some also allow over payments at any time.

The one I have in mind (without knowing your full details) yould be a lifetime tracker at 4.99%, and no personal income is required (most lenders need min income of £25000 pa). It has fees totaling £2600.

So it's up to you to compare that to the loan offer you have in mind which I suspect has low / no fees?

The £25k mortgage at 4.99% costs £104 pm.

Tax implications you need to cover with an Accountant, but personally I think they will be largely irrelevant (if you mitigate tax, you pay interest instead so........)

For the mortgage option you will usually need to be an existing home owner staying put.