Have we saved enough to do this?

Linton

swindiff wrote: »

Plus tax relief

The payment will be an employers contribution and so does not affect the OPs husbands tax. I think the 250 should be 240 being 6 years payments - ie this year and the 5 up to when when husband is 55.

atush

Too much exposure to property IMHO.

sweetmelody

Brynsam wrote: »

Why is your husband the sole shareholder? You're missing a tax break on dividends - you can always have a second class of share if he doesn't like the idea of his voting rights being diluted by his wife's holding!

I didn't think this would be worthwhile as I'm a higher rate tax payer? Will look into it again but, yes, my husband would be looking at retaining 10%% voting rights!

Linton wrote: »

I agree with bostonerimus that you need to make a detailed budget, at the moment it doesnt seem 100% convincing. Also you need to stress test it against major increases in mortgage rates. Having a large variable rate loan and a fairly fixed income could be uncomfortable.

We have a budget based on expenditure now and expenditure including the mortgage repayment on the increased mortgage. It is affordable but having the security of the additional provision available at 55 if my employment situation changes (for any reason) or if mortgage rates increase significantly (we would fix for the five years) really appeals to me.

To those that have made the comment about so much wealth tied up in property, I don't really see the point being made here. This would be our home which we plan to live in for many years. I understand that it would mean we are highly geared (increasing the mortgage on our PPR and combining it with the mortgages on the investment properties), and this point has also been made, but we wont be reliant on this house to generate any income for us. We aren't looking for any capital growth in either this property or the investment properties.

Linton wrote: »

The payment will be an employers contribution and so does not affect the OPs husbands tax. I think the 250 should be 240 being 6 years payments - ie this year and the 5 up to when when husband is 55.

Aaargh - so embarrassing! Yes I did mean 6 years of the £40k annual allowance, totalling £240k not £250k

sweetmelody

Linton wrote: »

I agree with bostonerimus that you need to make a detailed budget, at the moment it doesnt seem 100% convincing. Also you need to stress test it against major increases in mortgage rates. Having a large variable rate loan and a fairly fixed income could be uncomfortable.

bostonerimus wrote: »

Have you done a detailed budget. You might think you are ok, but seeing where everything goes can be illuminating.

I would say the biggest areas of uncertainty are the children....they can be expensive.....and the mortgages. I'd want to reduce any outstanding mortgages.

We have also done a budget for expenditure in retirement, and expenditure is well within the £50k expected income. We effectively took out the mortgage repayments and assumed all spending on children will be on ourselves (they are expensive!)

Terron

kidmugsy wrote: »

Would there be any advantage in getting rid of mortgage debt by selling one of the properties?
[...]
By golly, you're not worried about having so much of your wealth tied up in just one sort of asset, residential property?
.

With total income in the higher rate taxband there will be some extra tax due as the reduction in mortgage relief kicks in. How much depends on how much interest is being paid. I'd guess at a little over £1000 when it fully applies. Paying down or paying off the mortgages would help.



I have quite a bit invested in property too. I plan to sell one next year and put the money towards paying off the mortgages in my own name. It is a former home so there will be no CGT and also my lowest yielding property.



I think a few unmortgaged properties are good to have in retirement. Interest rate and property price changes do not affect them. If they were well chosen and you have a system for finding good tenants the rents should be fairly reliable, though you would not want one property to be too large a proportion of your income.



On the other hand if your net yields are too low then selling might be a good idea. I had a good year last year and averaged over 8% but I am mainly in an area with low prices and high yields.