We have £23K equity - would we still be made to buy a buy to let property?

voucherqueen_3

We have £230K equity in our property with a £15K repayment mortgage (we have been paying £5K a year off for last 3 years) which should be clear in next couple of years.

We only have around £15K cash, some of it tied up and some money in long term ISAs (can't imagine it's more than £10K)

Would we be in a good position to buy another property as a retirment investment. Was thinking of one for say £130K - my husband thinks we should release £50K from our property and have an 80K buy to let mortgage - I think the rent would only cover the £80K BTL - say £550 a month on a terraced property.

So tecnically we would end up with another property that was completely ours in 25 years and we would get a retirement income from it but we would have had to pay out approx £400 a month mortgage on it (the £50K we released from our property)

Would we be mad to do this? I have been thinking about it for a couple of years now but my husband thinks we have definitely missed the boat.

We have around £900 spare at the moment which is going into cash savings, ISAs and pensions but all the returns are rubbish. Maybe we should just stick to this and not risk anything?

Maybe the above sounds completely stupid but I would welcome any views - how does anyone make a BTL pay these days?

Romani_Ite_Domum

voucherqueen wrote: »

We have £230K equity in our property with a £15K repayment mortgage (we have been paying £5K a year off for last 3 years) which should be clear in next couple of years.

We only have around £15K cash, some of it tied up and some money in long term ISAs (can't imagine it's more than £10K)

Would we be in a good position to buy another property as a retirment investment. Was thinking of one for say £130K - my husband thinks we should release £50K from our property and have an 80K buy to let mortgage - I think the rent would only cover the £80K BTL - say £550 a month on a terraced property.

So tecnically we would end up with another property that was completely ours in 25 years and we would get a retirement income from it but we would have had to pay out approx £400 a month mortgage on it (the £50K we released from our property)

Would we be mad to do this? I have been thinking about it for a couple of years now but my husband thinks we have definitely missed the boat.

We have around £900 spare at the moment which is going into cash savings, ISAs and pensions but all the returns are rubbish. Maybe we should just stick to this and not risk anything?

Maybe the above sounds completely stupid but I would welcome any views - how does anyone make a BTL pay these days?

The reason pension investments have been so bad is that the dotcom bubble burst 7 years ago. It is now starting to recover and may become a better place to put your money.

When the house bubble follows suit, it too will take a long time to recover. You could find in 10 years time the house will be worth less than you paid for it.

That's one opinion. There will now follow lots of others on how property has quadrupled in the last ten years and now would be a good time to buy.

porridge

Romani_Ite_Domum wrote: »

The reason pension investments have been so bad is that the dotcom bubble burst 7 years ago. It is now starting to recover and may become a better place to put your money.

When the house bubble follows suit, it too will take a long time to recover. You could find in 10 years time the house will be worth less than you paid for it.

That's one opinion. There will now follow lots of others on how property has quadrupled in the last ten years and now would be a good time to buy.

Absolute rubbish !, far too much doom and gloom on here !, Re housing crash-wishful thinking from quite a few on here.

Sounds like a damn good idea in my opinion

sortofok

Anyone can make money in a rising market. Keeping it and even prospering in a falling market is a lot more difficult.
The times they are a-changing my friend.
When every man and his dog starts getting into a certain class of investments the smart money moves out.

PJD

porridge wrote: »

Sounds like a damn good idea in my opinion

Buying a property as an investment at the very top (or very near top) of one of the biggest UK housing bubbles ever seen, with debt at an all time high & interest rates on the rise?

hmmmmmm....

porridge

PJD wrote: »

Buying a property as an investment at the very top (or very near top) of one of the biggest UK housing bubbles ever seen, with debt at an all time high & interest rates on the rise?

hmmmmmm....

Many of the doom and gloom mongers have been saying this for years and years!!, the OP is also looking at this as a long term investmentment property !!.

PJD

porridge wrote: »

Many of the doom and gloom mongers have been saying this for years and years!!, the OP is also looking at this as a long term investmentment property !!.

Calm down, it's only a forum.

Just because a crash hasn't happened before now, doesnt mean to say that it will never happen does it.

nelly_2

Go for it I say!

JoeK_3

Here is another angle.

Why not move and buy another house in the best area for say £150,000 more than your current property.

£150,000 x 6% = £750pm interest only

Take out an interest only mortgage until your retirement date and then sell the property, step down and take the profit tax free.


JoeK

sortofok

Voucherqueen -at this point in time your husband is right you have missed the boat as regards buying a property for investment. But all not lost as regards a comfortable retirement.
From your figures and your timescale of 25 years I would say that you are in a good position to make serious gains in other markets which would outperform property. Have a look over on the savings and investments thread for starters.
As I have said on previous thread - "the times they are a-changing"

If you do go ahead with the property good luck. But remember there'll be another boat arriving before you retire.

voucherqueen_3

JoeK

It just worries me paying out that much on a mortgage every month but I can see that the end goal would be worth it.

We have two children who are 8 and 12 so I don't want every penny going towards a mortgage.

Would it worthwhile upgrading to another house and put £80K on the mortgage?

But I do worry about their future and think we should be doing something now to try and get another house as we have so much equity. I always thought you only did it if the rental payments covered the BTL mortgage but we know someone who bought 6 years ago and he is only managing this.

I think if we had £50K cash we would definitely do it but we haven't.

I really don't know whether it's worth it as we would have 20 years of paying a £50K mortgage to get another property, worth around £130K at the moment. I don't know whether all the figures balance out. I think I need to look into everything in more detail as I am not sure about pitfalls.