Overpay or BTL?

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.


  • Lilla_DLilla_D Forumite
    359 Posts
    Third Anniversary
    Well, when considering a BTL, you should assess income and outgoings as much as possible and may also want to speak to an accountant. The tax rules are changing in terms of what you can deduct as cost and you don't want to end up in a situation where you lose money.

    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.
    I am a Mortgage Broker
    You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • edited 3 August 2017 at 7:07AM
    AnotherJoeAnotherJoe Forumite
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    edited 3 August 2017 at 7:07AM
    OP why do you think that as yet unborn children would want to live in (and share ? ) a random flat you've bought now, in say 20-30 years time?

    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.
  • ThrugelmirThrugelmir Forumite
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    connors07 wrote: »
    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.

    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.
  • connors07connors07 Forumite
    121 Posts
    Seventh Anniversary 10 Posts Name Dropper Combo Breaker
    Thanks for the replies. I have it as my two options because a lump sum overpayment gets rid of debt and saves me a lot of money in interest; giving me potentially more career freedom in a shorter space of time. I don't like the term wage slave but with 28 years to go on my mortgage I won't be looking elsewhere as I'd see that as a risk.

    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.
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