£400 a month to invest - should I get a BTL?

Pobby

I have varying amounts of money each month to do something with.From maybe £200 to £1,500.Average £500+.Although we are mortgage paid up,the last place I would go is into the property market.With what is happening in the USA,Spain and imho Ireland is the next place,I would learn a lesson from there.

Apart from pensions,we have now only one stock market investment.The rest is in cash or cash ISAs.I am in cash as I feel we are entering a new economic cycle which doesn`t look to clever to me.Right now I suggest caution.

angel_eyes_3

misterman wrote: »

we're now in our 4th house, valued at today's prices at 300k with a 110k mortgage.

I'm not sure from your post whether you have now paid off your mortgage or not. If not, would you consider overpaying on your current mortgage? Over 25 years an overpayment of £400 would save you £57,043.24 in interest and would mean you fully owned your home 13.5 years earlier (i.e. in 11.5 years time).

https://www.channel4.com/money/homebuying/overpaycalc.htm

there are other overpayment calculators (look on mortgage free wannabe board, where I lurked before change of circumstances lead me to lurking on this board!)

HTH


Edit: the link doesn't seem to want to work. It should say

channel4.com/money/homebuying/overpaycalc.html (with a www. in front).

Anyone know why it won't let me post the address?

Mrs_pbradley936

I posted this on another thread but bits of it may be useful to you.

Well if it helps I can give you a bit of history and figures on letting from my own experience. In the early 90s the return was in the region of 9%. Based on a two bed flat which cost £60k and brought in £450 per month. 450 x12 =5400.

Now that same flat returns 5.7% because the rent is £650 per month and it is valued at
£135k. 650 x 12 = 7800.

Now if you do the figures at an interest rate of say 7% to borrow 60k over 25 years would cost you £424 per month. To borrow 135k at the same rate would cost £954 per month.
In the latter example the rent does not cover your expenses in fact you have a shortfall of about £300 or 50%

BUT interest rates have not been stable over that period in October 1990 the rate was 14% whereas in August 2006 it was 4.75%. Someone that is far more expert than me will be able to tell you what all this means in terms of your own circumstances. I just know that I could not afford to get into Buy to let now.

dannyboycey

BTL would be an incredibly stupid option.

Use up your ISA allowance, then put the rest in a high interest account. You can easily get 6% on your savings - you can't do that on BTL at the moment.