mortgage free at 35?

jamol

Hi I am considering my options, I own one flat thats let out, I am living at my parents.
I am extending the lease currently on my flat and planning to sell it to an investor.
I have a mortgage of 55k and need about 23k to extend the lease. I think I can sell the flat for close to 225k (based on last sale).
So I could end up with £145k after selling. Add to this money I'm owed (and being paid back) of 35k and I have £180k to spend. That could just about buy me a studio/1 bed flat outright in my local area, or possibly a two bedroom flat about 10 miles away.
I am 35 with no kids and no plans for any at this time.
Should I follow this plan and become mortgage free?
The idea I had originally was buying a second property with a minimum of 25% equity in each. However the downsides of this are stamp duty and tax.
So do you think the possibility of being mortgage free is the way forward for me? Then worry about other investments such as another property or savings/pension later?

NorthernMonkey1

At 35 you should probably have some other investments, especially pension.

freshcotton

I'm all up for being mortgage free asap. You would have more each month to save and invest and you save loads on mortgage interest. I'm paying everything I have to clear mine, hopefully before I'm 32.

I personally don't trust pensions, the government have too much control over them, however they clearly work very well for some.

edinburgher

freshcotton wrote: »

I personally don't trust pensions, the government have too much control over them, however they clearly work very well for some.

I think that this is quite a common view in the UK and it blinds people to the great value of wrappers such as pensions that allow you to (potentially) reduce your tax bill and grow a vast range of investments over time. Yes, parliament can pass legislation that can have negative effects on your retirement planning, but they also bring in a lot of useful regulations (for example, pension freedoms, or improvements to pension scheme stability and security).

Don't think for one minute that the government can't do just the same with property (for example, Brexit will likely cost people in prime locations quite a bit of value in their homes) and the BoE (ok, so it's independent), can raise interest rates overnight, pricing out potential owners for your home should you decide to sell.

A bit of both is a much more sensible approach (and throw in some cash savings and ISAs while you're at it)

freshcotton

my pension fobia is clearly irrational. I just wouldn't place money somewhere I couldnt access at some point. The problem with pensions is that you are barred from doing so till a fixed date so you couldn't transfer it back.

I'm convinced that there is going to be a massive world financial crash one day (nothing to do with brexit) and I fear the government will take what they need like they did in Greece. If this happens, pensions will be most vulnerable because you can't legally touch them.

I'm just anti government and a conspiracy theorist, so never take money advice from me.

Hard cash and gold all the way for me, just like my great grandma

edinburgher

I think you might be thinking about Cyprus, or did Greek depositors face financial haircuts as well?

Well, there have been quite a few massive financial crashes even in my short lifetime (2008 saw American investors who were 100% in equities see a peak to trough drop of 45%+ from memory). I expect there to be quite a few more.

A bet against equities (the general idea that companies will create useful products and services) strikes me as essentially misanthropy, a bet against humanity. Don't get me wrong, there are plenty of stupid humans and there are limits to how fast we can grow, but I don't see another dark age. Governmental conspiracy theories have always struck me as odd, if you've ever seen PMQ's, I can't really see how the UK govt could be up to much

(Like all grans?) my Gran made the best soup ever and was the most caring woman I've ever known - it doesn't mean she was any good at investment advice :rotfl:

freshcotton

True
It's probably a lack of knowledge on my part. I suppose a few hand selected ethical companies to invest in is probably a good idea. Would rather do it myself than pay a pension body. And the government don't give tax relief on pensions because they want to, I think it's so the money pyramid can stay alive. Oh and don't ask me about the moon landing ...

edinburgher

freshcotton wrote: »

True
It's probably a lack of knowledge on my part. I suppose a few hand selected ethical companies to invest in is probably a good idea. Would rather do it myself than pay a pension body. And the government don't give tax relief on pensions because they want to, I think it's so the money pyramid can stay alive. Oh and don't ask me about the moon landing ...

SRI funds (ethical funds) have grown in popularity of late, there are quite a few choices depending on your particular flavour of 'ethics'. It's very hard to get exactly what you want sometimes, but probably less risky than stock picking (which most people make lower returns with vs. well diversified funds).

Might be worth considering if you actually want to retire and don't want your savings eroded by inflation and the PITA of hauling your doubloons to the local pirate bank to exchange for money that the shops will actually take