Here we are again...

chupachups4

Hello,

We are MF since april, so we began to think about retirement. DH should retire in 5 years. And... we just took out another mortgage for a rental flat. The rent will cover the payements but our aim is to pay the mortgage early to keep the rent money for us in retirement.
I am 47, DH is 55, we have 4 DD and 1 DGS. DD1 left home last year, DD2 should have her flat next month. DD3 is 17, but will live with us all our life as she is disabled. DD4 is 16. DGS is 3 and will still live with us in the week and school breaks
We can't do anything on the mortgage now as we can't overpay before the 3rd year. The plan is to save for 2 years and then begin to overpay.
I will come back tomorrow with the numbers...

MrsLovely

Good luck with your next project. Me and my husband will be exactly you and your husbands age when we are mortgage free. So just over 2 years to go. We also think what we'd do next, so will follow you with interest. x

chupachups4

Thanks Mrs Lovely.

So, the Numbers….
We took out a 110% mortgage for 166504 euros. Interest rate is 1.20% on the capital, but we then have to add fees and insurances, so the total iterest rate is 2.08%. The payment is 780euros + 57 euros for the insurances. The rent will be 840 euros.
I need to factor in all the bills such as taxes, boiler maintenance, etc...
We will exchange at the end of the month, and the first payement will go out early december.
We will have our deposit back and that will pay for paint, kitchen fitting and the first 3 payments. I hope to have a tenant in place in february.

In the meantime we'll have a one month holiday in Thailand to celebrate the mortgage Freedom on our home. All budgeted and saved for.

We are not allowed any overpayment before the begining of year 3. We can then up the payment by 10%, AND overpay by at least 10% off the capital.
My first goal is to save 936 euros to be able to up the payments by 78 euros pm. This one should be quite easy. The second one is to save 15100 euros to overpay 10% of capital at the begining of 2022 (the balance should be 151000 euros then).

kangoora

chupachups4 wrote: »

Thanks Mrs Lovely.

So, the Numbers….
We took out a 110% mortgage for 166504 euros. Interest rate is 1.20% on the capital, but we then have to add fees and insurances, so the total iterest rate is 2.08%. The payment is 780euros + 57 euros for the insurances. The rent will be 840 euros.
I need to factor in all the bills such as taxes, boiler maintenance, etc...
We will exchange at the end of the month, and the first payement will go out early december.
We will have our deposit back and that will pay for paint, kitchen fitting and the first 3 payments. I hope to have a tenant in place in february.

In the meantime we'll have a one month holiday in Thailand to celebrate the mortgage Freedom on our home. All budgeted and saved for.

We are not allowed any overpayment before the begining of year 3. We can then up the payment by 10%, AND overpay by at least 10% off the capital.
My first goal is to save 936 euros to be able to up the payments by 78 euros pm. This one should be quite easy. The second one is to save 15100 euros to overpay 10% of capital at the begining of 2022 (the balance should be 151000 euros then).

I'm trying to understand how you are going to make money on this. Your mortgage and insurance costs are (near as damnit) the same as the rental at 840 euros.

You then also have any bills not covered by a tenant. Surely you're also going to be paying tax on the rental income (20%?)? Are you using a management agency or collecting the rental yourself directly (obviously further cost of at least 15% if agency used)? Finally, have you factored in loss of income for void periods where you don't have a tenant?

I presume you have a 25 year mortgage due to the figure of 780 euros and your DH will retire in 5 years and you will lose his salary so I'm unsure how you will manage to keep making overpayments of any great amount. If it's going to take you 3 years to save 15k then, presumably, you can only overpay another 10k by the time your DH retires leaving you with a mortgage of 141k (say 135k after some capital paid from regular payments). If you remortgage 135k it will be about 580 euros mortgage payment (assuming you can remortgage if DH is no longer working).

Finally, do you really want the hassle in retirement of being a landlord and dealing with emergencies at all hours of the day, possibly flooded bathroom at 3am, boiler blowing up, damage to property and, potentially, non-paying tenants who need to be evicted (worst case scenario).

I'm not trying to be antagonistic here, I'm genuinely confused from the figures you have given.

chupachups4

I'm happy you popped in Kangoora
1) you ask interesting questions
2) I'm french and only learnt english at school. I can see you understand my writings so I'm quite proud of me :j:rotfl::rotfl:
I don't work so I don't pay any taxe. The rent will be on my name, we can deduct intersets and all the bills, so no taxe at all.
No agencies, I will collect the rent and do everything on my own.
The mortgage in a 20 years term, 2.08% interest rate fixed during all the term.We have an insurance attached to it covering job loss, health problems and death.
We will take out a free insurance for the flat: if the tenant doesn't pay the rent or void periods then the insurance will pay us.
The flat is just accross the road and DH can do any minor repairs. We will have a landlord insurance for flood or fire, etc...
We have 12000 euros sitting in a saving account if repairs are needed at home or at the flat.
I think we can save more than 15000 euros in 2 years but we are not allowed to overpay before the end of year 2, and then, we have to averpay by at least 10% of the capital only one time in a year. I put this number to have a first target.
We also want to downside at some point. Our house is valued 400.000 euros and we will buy something between 250 and 300.000 euros.
And we have other savings: I will open a saving account with a 2.80% interest rate, and I'd like to try the stock markets.
We'd like to earn money from the rent between 5 and 10 years.

chupachups4

I sold 6 items for 101 euros today. I will add this to my signature when the money hits the account.
I did some researches about the stock market yesterday. Quite difficult to understand how it works…
I packed some dishes this Morning for DD2's move, resulting in one empty cupboard in the kitchen!
I now have to sort the toys to split them between DD2's flat and here.
And I have other things to sell, must list them.
I've started a small side business last year. It makes 100 to 350 euros pm.I'll need to grow it. Will think about that in the fews next days.

chupachups4

today I went groceries shopping wich came Under budget. Payday on the 30th so we should be ok as I never do top up shops. Remaining balance in the groceries account is 2 euros.

I sold somme DGS's clothes for 50 euros. That will go in the OP account.

No plan for the Week-end, except DD4's trampoline instructor training, but that doesn't involve any spends.

chupachups4

emergency vet visit on Sunday. 154 euros later….the dog has osteoarthritis.
Nothing else to report. I need to list some things. And to book the hotel in Thailand.
we should have the keys on friday for the flat, but I'm not sure the money from the mortgage would arrive on time

chupachups4

Last working day of the month, and pay day.
I transferred 250 euros to the groceries account as we'll leave for thailand on the 12.12.
I have 215 euros in the business account. 30 euros are earnmarked for taxe. I think I'll transfer 100 euros to the OP account and keep 85 euros to grow the business.
And I have 248 euros from sales to transfer there as well
So it will be 348/936 euros for the first target.
I must list things to sell as we will be away for one month and enable to make money .