Owning 2 Properties or 1 - Good or bad debt?

Cintrapark

I own a two bed property in London and the mortgage is around 170,000 GBP. I believe it is worth around 350,000 GBP. The rent falls just short of a full repayment mortgage. I hope to shift on to 25 year repayment mortgage in a couple of months.

I'm now living in Tel Aviv, Israel and I bought an off plan apartment which will be ready in two years. Once the building is ready in 2017 I will take out a mortgage of around 140,000 GBP. My partner will assist in paying off the mortgage even though it will be my apartment. The apartment at that point will be worth around 430,000 GBP.

I do not plan on returning to the UK.

If I were to sell my apartment in London I would have zero mortgage in Israel AND I could invest the money left over together with the rent from paid by my partner.

In addition, I also have a pension from work and a few investment funds that I contribute to every month (300 GBP a month).

The question is this - do I sell the apartment and live mortgage free in Israel, or tough it out so that I ultimately have 2 apartments.

AndyT678

Cintrapark wrote: »

I own a two bed property in London and the mortgage is around 170,000 GBP. I believe it is worth around 350,000 GBP. The rent falls just short of a full repayment mortgage. I hope to shift on to 25 year repayment mortgage in a couple of months.

You do know that there are specific rules for overseas landlords such as automatic deduction of tax by the tenants and that only mortgage interest payments are tax deductible not the capital repayment etc... Not sure that many mortgage companies will want to touch you if you're resident overseas either.

Cintrapark wrote: »

My partner will assist in paying off the mortgage even though it will be my apartment.

No idea about Israeli law but in the UK that could create a beneficial interest in the property for your partner.

Cintrapark wrote: »

The question is this - do I sell the apartment and live mortgage free in Israel, or tough it out so that I ultimately have 2 apartments.

If you won £200,000 tomorrow would you use that extra money as a deposit on another BTL property in London or would you do something else with it? Whatever the answer is do that.

saintalan

AndyT678 wrote: »

You do know that there are specific rules for overseas landlords such as automatic deduction of tax by the tenants and that only mortgage interest payments are tax deductible not the capital repayment etc... ..

Hi Andy, doesn't that "Capital repayment" apply to UK landlords too?

AndyT678

It does. That sentence would probably be better written the other way around.

"You do know that only mortgage interest payments are tax deductible not the capital repayment and there are specific rules for overseas landlords such as automatic deduction of tax by the tenants etc... "

Cintrapark

Thanks guys - yes i knew about all that. Will have to think about the selling option