Property investment advice - is this small change in grand scheme of things?

Newlyboughthouse

Hi all

I have a dilemma. I signed up for a 2 year remortgage fix at the start of November (too late to get out of cooling off period). I have an outstanding balance of £55,000 on my mortgage on a house worth around £280,000. 

I want to remortgage to release the equity to invest, however, the penalty is a psychological blocker for me (2%). So I would have to pay £1,100 penalty. Like most probably I am averse to paying avoidable charges, but I know obviously sometimes this is inevitable. The rate reduces to 1% penalty in year 2 of the fix.

What are your thoughts - is this small change, or would you wait, continue to aggressively pay down the outstanding balance to potentially get a lot more equity out in a year or 2?

My plan with the remortgage funds are to part put into property bonds, part buy a flip property, part buy a holiday home.

What do you guys think - would you think nothing of the penalty and do it now or wait?

Thanks

bowlhead99

So you are not looking to pay off the 55,000 , but instead want to borrow more, so you can go and invest the money in your property development, property bond and holiday home investment empire?

Setting aside the soundness of the decision to borrow at residential mortgage rates to lend via 'property bonds' to people who can't borrow at residential mortgage rates (which is typically an area fraught with risk), it seems strange to want to pay a penalty to pay off a mortgage so you can borrow the same money again on another mortgage. Would the existing lender not entertain the idea of simply lending you more money against your main residence on a new deal to run alongside your existing first mortgage charge with them?  I suppose 'release further equity to support the purchase of another property' is a more acceptable use of the funds than 'can I borrow more from you to gamble on property bonds?'...

Newlyboughthouse

I've asked for further borrowing but they won't lend any more than £36,000. It seems very stingy of them!
Don't get hung up on my property bond idea - that's just an idea floating at the moment for me - the idea is having a passive income offset by a much better interest rate, without the hassle of a BTL. However I may invest in physical property as per other two ideas.

grumiofoundation

It's probably a sensible idea to determine what you are going to invest in first.

dunstonh

Don't get hung up on my property bond idea - that's just an idea floating at the moment for me 

Good because they have a high failure rate.

 - the idea is having a passive income offset by a much better interest rate, without the hassle of a BTL. 

So, what would the holiday home be?  for you not earning an income or rented out?   If rented out, they are far more hassle than a BTL.  Why are you focusing so much on property?

Newlyboughthouse

Holiday home would be partly for me and partly to rent out. Dunstonh I sent you a message - I'd be interested to know where you got your info about the high failure rate of bonds - property investment gurus (impartial) have spoken quite positively about them.

bowlhead99

Newlyboughthouse said:

 I'd be interested to know where you got your info about the high failure rate of bonds - property investment gurus (impartial) have spoken quite positively about them.

I'd be interested to know where you found 'property investment gurus' whom you considered to be impartial on the relative merits of property-backed bonds vs conventional investments.

Newlyboughthouse

bowlhead99 said:

Newlyboughthouse said:

 I'd be interested to know where you got your info about the high failure rate of bonds - property investment gurus (impartial) have spoken quite positively about them.

I'd be interested to know where you found 'property investment gurus' whom you considered to be impartial on the relative merits of property-backed bonds vs conventional investments.

https://play.acast.com/s/thepropertypodcast/b5ac37dc-0add-49d6-b53f-ac7700c4e226

grumiofoundation

Newlyboughthouse said:

bowlhead99 said:

Newlyboughthouse said:

 I'd be interested to know where you got your info about the high failure rate of bonds - property investment gurus (impartial) have spoken quite positively about them.

I'd be interested to know where you found 'property investment gurus' whom you considered to be impartial on the relative merits of property-backed bonds vs conventional investments.

https://play.acast.com/s/thepropertypodcast/b5ac37dc-0add-49d6-b53f-ac7700c4e226

Where do you get the idea that they are impartial?

Newlyboughthouse

grumiofoundation said:

Newlyboughthouse said:

bowlhead99 said:

Newlyboughthouse said:

 I'd be interested to know where you got your info about the high failure rate of bonds - property investment gurus (impartial) have spoken quite positively about them.

I'd be interested to know where you found 'property investment gurus' whom you considered to be impartial on the relative merits of property-backed bonds vs conventional investments.

https://play.acast.com/s/thepropertypodcast/b5ac37dc-0add-49d6-b53f-ac7700c4e226

Where do you get the idea that they are impartial?

They are 400 podcasts in before discussing property funds. The Property Podcast (from Property Hub/Property Geek) is one of the most utilised property investment education resources out there!
Just because you haven't heard of something before, doesn't mean it doesn't exist. I'm interested to see where poster above got the failure rates.

Albermarle

These companies were offering something similar to property bonds .
Wellesley ; Lendy : Collateral; Money thing etc  Probably worth a google .
Overall you should diversify your investments and not have all your eggs in one property basket .