Use equity to pay off mortgage early

rcotc

We have equity in our home and want the security of knowing it’s ours. I’m also keen to invest in the future. I’m thinking of using some of the equity in our house to buy a holiday let then overpaying our mortgage with the profits to the 10% limit. I’m thinking provided I do my sums correctly and the profit will be more than the interest this should help us pay our mortgage off earlier and mean we have a future investment. Am I missing any loopholes? I’m familiar with all the taxes etc buying an extra dwelling and the work involved in running a let.

John_G_Jones

How are you planning on releasing this equity while still keeping the house?

It sounds like rather than pay off your mortgage you are thinking about extending it to gamble on a risky business proposition, which is the absolute opposite of having the security that you mention in your first sentence.

If you want to pay your mortgage off early it’s better to cut back on your spending and overpay with the excess that you generate.

Thrugelmir

Leveraging with debt is double edged. Possibility of good returns likewise greater cost or even losses. .

AnotherJoe

Am I missing anything?

I expect you are missing some maths. Please show your workings.
There's also going to be a world of difference (and cost) running a let with a new tenant every few years, and a holiday let with new tenants every week, more voids, and more expense.

dimbo61

Pipe dream.
Buying costs, 3% Extra stamp duty, getting property ready to let, Landlord insurance, GSC, EICR, refurbishment costs, advertising and letting agents costs, TAX to pay, S24????
The list goes on and on, furniture , maintenance, void periods.
That boat sailed along time ago

dimbo61

PS forgot the fees, survey and costs of setting up a new business as a Holiday Let Landlord IF you can get the finance sorted.
Planning permission from the local council.

csgohan4

Have you consider all costs??

https://forums.moneysavingexpert.com/discussion/5956212/need-advice-after-evicted-a-tenant

https://forums.moneysavingexpert.com/discussion/5896992/evicting-tenants-via-court-and-bailiffs