Mortgage free & buying property

Ben11

Hi,
First of all I will give you a bit of info about me I am 27 and we have bought our first house over a year ago, we have done it up and looking to add about 15-20k on it. Our mortgage is for 35 years (now 34) and we are overpaying £100 a month. We have over £300 spare a month after all bills have come out. Do I pay off as much as I can and if I do can I draw out this to buy another house?

I work full time but want to do more and I am considering getting into property, we could draw equity out of our house in a few years and with savings buy a second house or do we buy our 'forever home' asap and begin saving for the second house after? Since we have moved house I have got a new job and we can afford a bigger mortgage.

My main point is that I am wanting advice on what to do next and will hopefully put me in good stead for the future either mortgage free or property portfolio but hopefully both.

Thanks
Ben

ian1246

Avoid going into Buy to Lets - the return is questionable, with potentially further crack-downs by future governments (Labour), eating into your returns.

Is your and partners pension sorted? If not, that would be your best bet - that £300 invested into pension would become £375 (£75 Tax Rebate), assuming your basic rate tax-payers (even more profitable if your higher rate tax-payers!) and excluding any pension contribution from company/employers which that payment may get. You'd then need to factor in growth on that £375 - potentially somewhere between 7-10% Annual Growth, each year (albeit with some risk when the markets dip every now and then). Compounding is your friend.

Ben11

Thanks for your reply Ian. We both put into pensions which is matched by our employers I put in 6% and company puts in 10% and my partners is slightly better so don't really want to put in anymore pension wise.


Does anyone have any other recommendations or advice please?

varfor

A lot have people have made big money from property but that’s no guarantee it will continue.

I’m probably biased but I don’t think housing in this country represents value for money. I bought a modest house last year that has doubled in price over the last decade. This trend could continue but could also go the other way.

Lars Kroijer has some good thoughts on the subject: https://m.youtube.com/watch?v=vO3cxbl7TR4

I personally think it’s better to stay boring and diversify. I’d feel more balanced with decent pension contributions, 6-12 month emergency fund in cash, stocks and bonds (via low fee index funds), small percentage of precious metals and tiny percentage of speculative investments.

My absolute favourite investment resource is https://monevator.com/. There’s no get rich quick schemes though.

Ben11

Thank you for your opinion and also the useful links.


It feels like that property is not the way forward and I need to find something else to invest my time and potentially money in to. I am really keen to build a good platform so I can be mortgage free by the time I am 45 and hopefully retire early, so I just need to find the best way to help me do this (other than my job & pension).