Debt or no debt?

pcgtron

[QUOTE=ReadingTim;63987153

- Don't think a letting agent's going to be much use - they provide as poor a service to landlords as they do to tennants. Chances are you'll end up having to do their job for them, while still paying their fee.



Maybe I'm lazy, risk averse and financially unsophisticated, but unless you have a lot of spare time, energy, patience, DIY/maintenance skills, I can't see how the BTL route works out on a small scale basis now that interest only mortgages and rapidly inflating house prices are a thing of the past, meaning that the rapid flipping/leveraging process of acquiring a BTL empire simply isn't going to happen again.[/QUOTE]

Not all agents are bad. I let my old flat now through a local agent in North London who are fantastic. They sort all the problems for me, let tradesmen into the house if require, have found me llovely tenants. If you don't have the time or the inclination to oversea yourown btl, then ffind yourself a good agent.

onamissionEU

There is one factor that most people seem to forget about when making these decisions; INFLATION.

I am not talking about direct house price inflation though this is very much linked with general inflation. When you take on a mortgae ie debt, you are borrowing a fixed sum at todays "value". Lets sday you borrow 400k to buy a house.

Fast forward 20 years (and lots of QE later) the real value of that borrowed money (say, the amount you would need to borrow to buy the same basket of goods or house) might be in the region of 600k. YET you still only owe 400k (assuming an interest only mortgage).

One could argue that the value of savings etc will also go up - though at todays saving rate Vs inflation you would be making a decent net loss each year. You could also argue that you are paying interest on that borrowed cash which could be saved by not borrowing. Fine, if you have somewhere else to live for free - otherwise you are paying the LL rent which will generally be more than interest payments.

I remember taking a mortgage when I was 22 for 145k - and was scared to death by the prospect. A few years later with a 110k mortgage, an income 3x what it used to be and a property worth 220k I wonder what the fuss was about!

A mortgage is very different to running up a CC debt for holidays and "stuff". If you can comfortably afford the repayments and are confident you will keep your income then plan A is a no brainer.