Buy to let

Cassidyuk

After inheriting £100K I am looking to buy a house with the purpose of a rental yield.
My question is should I buy the house in full or get a buy to let mortgage like a local estate agent suggested.


Surely the cost of setting up a mortgage and paying it off outweighs the profit returns


For instance a £50 mortgage will cost £66K to pay off in 10years, whereas a rental return off say 6% on a fully paid into house will give me an income of £60K


Anybody has any advice


Chhers

slopemaster

Depends whether the nett rental return is greater than the nett interest rate.

Also depends on your attitude to risk

G_M

And what tax you'll be paying and what tax deductions you can make from the mortgage.

If you get a £50K mortgage, you'll still have £50K to play with. In the stock market that might earn.....??

Cornucopia

You can deduct the cost of mortgage interest from the rent to establish the taxable profit.

Depending on the area and your tax position this could generate significantly more income, albeit with a different level and type of risk.

e.g. a £100K property might return £400pm rent, but a £100k deposit on a £300k house might return £1200pm rent less £550 for the mortgage.

Cassidyuk

Thanks to everybody who has responded.
I guess I need to get the calculator out and do some number crunching
At aged 58 I guess I wanted to be mortgage free but if that gives me more returns I shall look into it.

Thrugelmir

Cassidyuk wrote: »

whereas a rental return off say 6% on a fully paid into house will give me an income of £60K

Less costs and expenses. After which the yield may not look so attractive. Then there's the potential hassle you may also encounter.

Cautious_Optimist

Cassidyuk wrote: »

After inheriting £100K I am looking to buy a house with the purpose of a rental yield.

a rental return off say 6% on a fully paid into house will give me an income of £60K

I think you need to take a zero off that £60k...