Mortgage free either way, but which is best?
Frugaldom
Forumite 6.8K Posts
A friend asked me my opinion on this and I am still trying to think of the best answer, so please help out by sharing your thoughts.
Property prices in our area are falling, the market appears to be static. You can buy a decent 2 bedroom house for under 100k and you can rent privately from about £300 pcm. In fact, I've just seen a NINE BEDROOM house advertised for well under £200,000!!
IF you had £100,000 cash in savings, would you buy a property outright and live mortgage free or would you stash the cash in a high yielding account and use the monthly interest to cover rent payments? Either way, it's mortgage free living. Person concerned would still need to earn a living, but what would YOU do given the choice?
Property prices in our area are falling, the market appears to be static. You can buy a decent 2 bedroom house for under 100k and you can rent privately from about £300 pcm. In fact, I've just seen a NINE BEDROOM house advertised for well under £200,000!!
IF you had £100,000 cash in savings, would you buy a property outright and live mortgage free or would you stash the cash in a high yielding account and use the monthly interest to cover rent payments? Either way, it's mortgage free living. Person concerned would still need to earn a living, but what would YOU do given the choice?
I reserve the right NOT to spend:
The less I spend, the more I can afford!
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I bet you knew this was coming because it's an obvious question but where on earth do you live with property prices like that?
Original term: 25 years
Agreed redemption date: July 2031
Original advance: £155,220
[strike]Balance oustanding on 30.09.2007: £150,387.96[/strike]
Balance outstanding on 31.01.2008: £147,818.12
Amount repaid since mortgage start date: £7,401.88
Target: to reduce mortgage to £123,000 by 01.04.2010
Current monthly payment: £963.80 + £500.00 overpayment = £1,463.80
Revised agreed redemption date: January 2031
Answered my own question. You need a net return of 3.7% to earn £300 per month.
I think I would be tempted to buy the 9 bed place with a £100k mortgage and rent out the bedrooms I didn't need! (coz I'm greedy)
Offers over £87,500
Double fronted stone built property in need of complete upgrading but with potential for 2/3 separate units. Vestibule, Living Room, Study, Kitchen, 2 Sitting Rooms, Bathroom and 5 Bedrooms. Partially double glazed. Good sized rear garden. Partial solid fuel central heating.
£150,000
9 Beds 3 Receps 2 Baths.
A very well presented end of terrace townhouse of great character within the popular village of (omitted). The property occupies a central location within the village and is only a short walk from all local village amenities. The property is in excellent condition throughout to include redecoration/carpeting and has been extensively refurbished in recent years. There are many features to appreciate including well proportioned and plentiful accommodation, internal period finishings, full oil fired central heating and partial window replacement. This would make an ideal premises for B & B use. HALLWAY, LOUNGE, DINING ROOM, KITCHEN, UTILITY ROOM, SITTING ROOM, BATHROOM, SHOWER ROOM, 9 BEDROOMS, GARDEN
There is no shortage of properties as per the above examples, and these are not in remote areas. I know that owning a property outright is a bonus on the longterm security front, but I can see their point of view that it would be nice to have 100k invested (high interest, of course) in the hope that interest rates increase. Everyone's up in arms at the prospect of 6% but we can't just forget that it's not even half of what it was approximately 20 years ago. What would you do?