To pay off or not?

bendecko

Hi everyone.

I've got 2 BTL houses with IO loans.

Each house has 50K loan on them 100K in total.

I've got 50K in an ISA for repayment vehicle with 10 Years to run on both loans.

Should I cash out the 50K and pay one of the houses off and then start again with the ISA and use the rental cash to boost its growth.

Or just keep plugging away?

Thoughts please with reasoning.

JimmyTheWig

Is the ISA cash or stocks and shares?
What interest are you paying on your mortgages?
What return are you getting on your ISA?
What is your income tax position?
Are you looking to buy any more properties?

bendecko

Hi Jimmy thanks for responding.

I'm paying about 2.5% on one, and was on the other but the BoI have just doubled my rate (triggering this enquiry)

The ISA is stock and shares, and in these times of high inflation they are nominally doing well.

I'm non-uk resident, but have a small uk income of maybe 3 grand on which I get my personal allowances, plus whatever the houses make.

No more properties at this stage.

Let me know! Thanks again.

JimmyTheWig wrote: »

Is the ISA cash or stocks and shares?
What interest are you paying on your mortgages?
What return are you getting on your ISA?
What is your income tax position?
Are you looking to buy any more properties?

JimmyTheWig

The question just becomes whether you are earning more on your ISAs than you are paying in interest on your mortgage.
Obviously the stocks and shares carry a risk, so if the sums come out about equal I, personally, would choose to pay off the mortgage.

bendecko

Good plan.

So I looked at the statements £46,773.82 was the ISA valuation on 11/2012 and today 4/2013 and its £54,298.21 so a £7500 increase in just 6 or so months. I put in £250 a month.

The mortgages are around £100 a month, and even the BoI might only go to £250, so I think that's clear then.

In these high inflation times, the mortgage debt will be shrinking and the nominal valuation on the FTSE of the shares will be inflating. So I think I stick with them.

Thanks Jimmy so much for working through this with me. It seems simple now, but cloudly to begin with.