Mortgage and savings - what to do.

DavidGrant

First post, so please go easy on me 😉

I have an "all in one" offset mortgage with The one account and am currently in the fortunate position of being about £24k ahead of my plan.

Effectively that's my savings, if I needed to spend £20k on something I can dip into the plan and still remain ahead of where. Need to be.

I would like to buy a second property to let, which will become my "pension" in years to come.

What I'm not certain about is whether I should remain with my existing mortgage provider to do this, effectively borrowing against my plan to put down on another property.

My existing mortgage plan does not give me the best rate available - currently 4%

Should I stay where I am? Or move?

Or should I continue to pay more off my mortgage so I can clear it early and then think about anotherroperty?

Thoughts?

ACG

They are 2 separate transactions.
1) Your residential.
2) The potential Buy to Let (BTL) property

You should be doing what is best for your residential and separately what is best for the BTL.

There are far lower offset rates available than 4% - I would strongly look at what else is out there.

As for whether or not you should do it, that comes down to you. Do you want to be a landlord? A letting agent is not a landlord, so if that is your answer then I think the answer is no. All a letting agent does it field the calls, take a cut and either pass on any problems to you or sends out their own handyman and charges you a premium.

I had a rental property for a couple of years. First tenant converted the basement to a cannabis farm. Drilled a 6 inch hole in the front wall for ventilation. Decided to pain the walls (badly) and then left without paying the last months rent - thankfully had a deposit but that then meant no money to fix the problems.

2nd tenant, burnt the carpet with an iron and tried to say it was there when he moved in. Thankfully I had the receipts showing it was fitted the day before he moved in. he also locked himself out 3 times in 4 months, the third time I made him come to my house in his dressing gown (I lived in a pub at the time and it was full of football fans ) - he never did it again.

Think carefully about doing it. It can be a good money spinner, but it can be a lot of hassle.

Thrugelmir

Becoming mortgage free is one of the best investments one can make. As removes a major worry for the rest of your life. Once free of the mortgage then you use your money in more speculative ways. There's an old saying only gamble with what you can afford to lose. Leveraging with debt multiples not only the potential return but the potential losses.