Over 50 and thinking of starting a Buy to Let

spud312r

Hi
Current mrotgage finishes soon and was thinking of using some of teh houses asset for a Buy To Let
Salary is over 50k , but also age is over 50 (54)
Looking for a small house/flat 160k

I know its a bit late, but would it be a wise decison..
I expect to be able to continue work with expected salary for at least next 10 years...

Just think of supplimenting pension ..


Regards

Wh05apk

If you take a BTL mortgage on the new property, then there will be no problem, as lenders happier to go into retirement, as not dependent on earned income, if you wish to raise the deposit against your existing property, likely you will be restricted to 10-15 year term, and also on repayment, making the monthly payments heavy, unless you have a large amount of equity in your property?

jamiefly

You are very nearly mortgage free considering other options before saddling yourself with more debt as BTL is a very tough market to crack. Late entrant BTLers can expect a yield of less than 2% on capital employed and a big leveraged risk on the mortgage.

You are a higher rate tax payer have you considered throwing all that into a SIPP instead. Assuming 12 years more work that'll give you a pot over £100k and a straight line payment of ~£5k per anuum and a 25% tax free lump sum.

Thrugelmir

Buy a property when you have the deposit and purchase costs etc saved up in cash.

By leveraging with debt. You are taking the risk of losing money. Not the recommended way of the building a pension fund.

spud312r

hmm so 170k less 50k deposit (from equity - 400k) leaves 120k btl and the 50k over 10year @ 6% roughly 560/mnth .
The BTL would eventually (3-5 yrs) be used by both working (hopefully) daughters until they have the ability to afford to buy

I have looked at SIPP's, but i have multiple pensions that i will evetually consolidate to reduce management fees etc. and both seem to play the market
Apart from the Sipps being more flexible when want to take money out , i dont see the BIG differences , my personal pensions allow me to choose what markets (although inside their portfolio) i want to spread the shares with.
And at my age i tend to lean more towards the low risk etc.

decisons decisons....

Wh05apk

With that much equity you could raise a £170k interest only mortgage on your residential property, which would have the benefit of being at a much lower rate than a btl, along with far lower fees, you could then buy the BTL outright, giving you more flexibility in terms of property/tenants/buying at auction etc.

Thrugelmir

Wh05apk wrote: »

With that much equity you could raise a £170k interest only mortgage on your residential property,

Thats little more than a speculative gamble on house prices rising. Which was the real attraction of BTL in the boom years 1998-2007.

If the aim is retain the property longer term to provide income. Then how the debt is repaid needs to be considered.

Often gets overlooked that capital is repaid from after tax income.

kidmugsy

spud312r wrote: »

And at my age i tend to lean more towards the low risk etc.

In which case don't enter a business where (as far as we know) you have no advantage. Any legal knowledge? Any trade skills? Any suitable houses around the corner from you?

Why would you want to make a leveraged bet on property prices when much of your wealth is presumably already in property? Why invest in something illiquid and indivisible?

Tax savings are (comparatively) low risk so why not just avoid 40% tax with some more pension contributions? Or, if you want a punt, and to diversify away from equities, invest your new pension fund into gold.