Another inheritance query

dawyldthing

I paid my mortgage off 3 years ago and it was the best feeling ever. I now work yo live instead of living for work.

Your other problem with btl is say you have someone in and they don't pay rent for 6 months (I live in an area where you can get houses for £70k ish, renting one gets around £450 a month rent), so that would be £2700 lost. Then they wreck the house, cause damp, ruin your walls - it could cost more yo fix it then your getting in. Then there's voids. Say if no one is in - I'm fairly sure council tax still needs paying now as I think they've changed the grace period. So it's not for the faint hearted.

You could put it into a savings and you'd get roughly £910 if you can get 1.3% (you might get a bit more to be fair, I've not checked the list). But getting into property is a huge huge risk, not for the faint hearts.

MrXYZ

I rented a property, it all sounds good but you need to consider as others have pointed out

What if they destroy the house? I had to have wooden floor boards fixed when people left my property, re painted.
What if the central heating packs up?
What if no one rents it straight away? You're paying council tax on it, electric, heating etc
What if your wife was out of work and you have two properties with no tenants
If it goes up in value, you sell, what about capital gains tax?

Not trying to scare you but they are things to consider... if you were buying 5 - 10 houses and running it as a business it's different. That isn't what you're doing though.

On the other hand it may all go brilliantly for you. Maybe it's a sheet of paper and asking yourself the hard hitting questions for the pro's and con's. I'd be with the pay off your mortgage group but everyone is different, I maybe just risk adverse.

Good luck with whatever you decide, wishing you all the best.

Thrugelmir

lytton wrote: »

A business startup was something I had toyed with however I have not yet found an entrepreneurial realm to occupy; ie I have no original or novel business idea, save for the tried and tested landlording industry.

Doesn't have to be. Anything which brings extra money into the household should be welcomed.

Dox

If you can buy a house for as little as £70K, you probably can't rent it out for very much - and after allowing for insurance, running costs etc would you actually make anything? And if the housing market continues on its downward spiral, would you even get back what you paid for it?

lytton

I hear the chorus. I had hoped to rely on insurance products to see me through any rough patches. My relative who rents has touch wood not had any of these nightmare tenants that you see on the tv, but obviously the risk is always there. As far as business suggestions go I would genuinely be interested, but I lack the specialist and transferrable skills queried by others. My employment experience is highly specialised (laboratory healthcare) and my hobbies are particularly niche (growing chillis). That’s not to say there is no room for a project, I’ve just been working on the presumption that business risks probably roughly equal the risks found elsewhere if things don’t go well.

Paying off the mortgage does seem logical, and given how much I’ve adjusted to a lower income it seems the obvious next step, but I think I knew that would be the advice before I hit that post button. Thanks again money savers.

kidmugsy

Dox wrote: »

if the housing market continues on its downward spiral ...

Eh? Downward spiral?

dawyldthing

The other problem is with relying on insurance pay outs is you'd find the insurance will go even higher or new exclusions added when you claim.

In some areas they will go down. Like where I live, it's an aging population, houses end up on the market a fair while as there building them as quick too so there's an over supply now never mind into the future

Primrose

I too would opt for the mortgage repayment option even if it means waiting until your current good deal comes to an end. I have known a number of people who,ve used an inheritance to invest in a rental property only to burn their fingers with unreliable tenants and large bills for repairing damage.
I understand your desire to invest in something which gives you an interest and a vestige of financial independence but have you considered the strain on your wife being the sole breadwinner. What happens if she loses her job? The economy is going through an uncertain economic period with Brexit at the moment and your prime objective should be to keep your family and household financially secure. Becoming an inexperienced buy to let landlord does not tick this box in my view.

I would stick the money in the best easy access savings account you can find until your mortgage comes up for renewal then pay it off. Meanwhile invest in a copy of What Colour is your Parachute? which is an handbook for people who are in employed or who are looking for guidance on an alternative employment route. It has lots of questionnaires to guide your thought processes along alternative possible income routes, including using hobbies as potential income earners.

You're unlikely to get another windfall like this. I suspect if it is a family inheritance the person who wanted you to have it would have wanted you to use it well to keep your family secure. Paying off your mortgage will ensure no institution can ever evict you from your home if times get difficult, if your wife becomes unemployed or too ill to work. . Ask yourself what price is worth paying for peace of mind ? Strange how financial security never seems to appear as an item in financial balance sheets !

justme111

have you done maths - how much more the money would bring you if it was in the rental property compared to mortgage paid off.
It is concerning that you seem to decide with your emotions ( you need a project and income ( rather than numbers. Although in principle the idea of btl sounds good and I am toying with it myself I do not think that your motivation is the right one.
Why not to pay off your mortgage and for a couple of years save the money that would otherwise go to it. Then you would have a deposit for a btl mortgage and if wanted so could get a btl mortgage and fulfill your dream. It is easy to risk easy money , if your calculations are right you would put your own money where your dreams are once you saved it as a result of no mortgage payments.

lytton

I have not yet decided, I wouldn’t bother posting here to gauge opinion if I had.