Overpay or BTL?

121 Posts

Hi all,
I am in the process of paying off my mortgage - £109K owed - 28 years left although I have been making large overpayments. Thankfully my agreement is I can make as many overpayments as I like without penalty.
I could stop overpaying and my mortgage would come down to £435 per month; for the house I live in.
I have £60k in savings which are now available to me after maturity.
I am taken by the idea of Buy-To-Let, I don't intend to become some property mogul (couldn't if I wanted to) and not looking for any get rich quick scheme by ripping off tenants. This is more to use as either like a pension years later or for future offspring to move into. I would be content with any possible rent slowly paying off the mortgage while putting a small amount aside for potential repairs/refurbishment which it may need.
I live in a town in Essex, a one bedroom flat costs around £115k-£130k in the area I know, for a house around £180k-£200k.
Does this plan seem feasible? Or would it make more sense to hammer my current mortgage?
Any advice is much appreciated.
I am in the process of paying off my mortgage - £109K owed - 28 years left although I have been making large overpayments. Thankfully my agreement is I can make as many overpayments as I like without penalty.
I could stop overpaying and my mortgage would come down to £435 per month; for the house I live in.
I have £60k in savings which are now available to me after maturity.
I am taken by the idea of Buy-To-Let, I don't intend to become some property mogul (couldn't if I wanted to) and not looking for any get rich quick scheme by ripping off tenants. This is more to use as either like a pension years later or for future offspring to move into. I would be content with any possible rent slowly paying off the mortgage while putting a small amount aside for potential repairs/refurbishment which it may need.
I live in a town in Essex, a one bedroom flat costs around £115k-£130k in the area I know, for a house around £180k-£200k.
Does this plan seem feasible? Or would it make more sense to hammer my current mortgage?
Any advice is much appreciated.
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Replies
Your lender choice and thus the potential interest rate and monthly payment will depend on your circumstances, the property itself and the expected rent, so you should also speak to a broker to understand your options.
If you reduce your current mortgage, then could consider how much you'd save and how it compares to potential gains achieved by other investment options that you'd forego.
Having said all the above, most people don't give it this much thought, just go for it and hope for the best based on their personal preference and/or other people's opinion/experience.
So, discounting that fanciful idea, why do you think BTL is a better idea than, for example, investments, a better pension, buying a bigger house and downsizing, or all of those ? What financial analysis lead you to believe that the choice was between BTL and paying off your current mortgage ?
Edit; so as said by thrugelmir you need to crunch the numbers but not just in the two alternatives but the ones I outlined as well, as a minimum, otherwise it's like deciding which is best to get from A to B, bike or walk, without looking at car, mototbike, train , bus etc.
Crunch the numbers and build a business plan to assess the viability of your idea. Be an expensive mistake to make if it doesn't produce a worthwhile return.
I like the idea of BTL because I have an interest in property, doing them up and transforming a house into a home. Once paid off providing it is well looked after (ultimately, by me) I see the rental income providing a pension in the future or maybe keep in the family if it suited them of course.
I will be crunching the numbers and getting a feel for the prices in the area. Thanks for all the answers posted.