In a bit of a pickle!

Snowdrop08

Hi, long time lurking, 2nd post.

Please can people have a look at our details and make suggestions?

I’ve been investing for about 20 years now and, to be honest, am in a bit of a pickle!  

OH is not interested in anything financial and I am obsessed. But now I’m totally confused with the complexity of our options.  

Here are the basic details;

OH : 62, occasional s/e work ~ £2000. Me : 61 part-time ~£9k Both br taxpayers. (Not married)  

Assets;

BTL - £132k mortgage, equity £245K. Due 2028. Interest only. 

        - 2 properties, income ~£14k net. 

           No other property.  

BOAT - ~ £70K 

SIPP’s - 

  - £40k ( £300 pm, for mortgage BTL)

          - £240 (£100 pm, CLS for mortgage BTL, £8-10K income)

          - includes ~£38K cash. 

NSP   - £17K @ 66yrs. 2025. Fully funded. 

ISA’S - £15k  

Emergency Cash - £5K

Our outgoings are very low- about £14K plus £7K savings. We would like to retire 2022, but will need to keep financing the SIPP’s to pay for the mortgage. 

The plan is to live off the rental income, topped up with £5K ISA for 3 years, then drawdown from main SIPP up to joint TA (£25K) if required. We live very frugally.

Is there another way? All comments highly appreciated!

Green.Lander

What is BOAT?

Brynsam

Green.Lander said:

What is BOAT?

Something you sail in.

Snowdrop08

Mode of transport/part-time home!

barnstar2077

Green.Lander said:

What is BOAT?

This question made my day, but it is all in capitals so I can see why it might look like an acronym.

bolwin1

You are making this more complicated than you need to. 

If your outgoings really are only £14K p.a. the state pension will cover this in around 6 years time with around £3K spare each year.  

To last between now & then you will need 6 * 14K = £84K.

Sell the BTLs, pay the mortgages off & you'd be left with £163K (£245K equity - £84K living expenses) + your SIPPs + ISAs. This is on top of what you say you need.  Retire next week & enjoy the boat.

Personally, I can't see the point of working to pay the mortgage on the BTLs, when it doesn't look like you actually need the money - unless you want to leave it as an inheritance. Also, the idea of managing 2 BTLs in retirement doesn't sound like retirement to me. 

Snowdrop08

Thank you, bolwin1. Yes, I agree that would be the obvious solution. Trouble is, I like the option of having diverse sources of income. If we did manage to pay the mortgage off by SP age, we would have more income than we need. I feel very muddled! The investments have been my hobby over the years and of course I’m “attached “ to them now! I’d probably have done better to stick with Global Trackers but I’m still hopeful of real progress with a handful of my shares. 

Alexland

Snowdrop08 said:

I like the option of having diverse sources of income.

Well the SP will be a very stable source of income and you can reinvest the equity from sale of the BTL gradually into S&S ISAs and SIPPs where you can buy income smoothing investment trusts, global trackers, etc. I am amazed your living costs are so low with a BOAT - assume you don't pay any mooring fees?

Snowdrop08

Thank you Alexland. Yes, we do pay mooring fees, but the plan is/was to travel and live off the rental income. Of course, it looks like we’ll have to reconsider that!

squirrelpie

Snowdrop08 said:

BTL - £132k mortgage, equity £245K. Due 2028. Interest only. 

SIPP's

  - £40k ( £300 pm, for mortgage BTL)

          - £240 (£100 pm, CLS for mortgage BTL, £8-10K income)

          - includes ~£38K cash. 

As well as needing to confirm what a BOAT is, I'm also confused by this.

£300 pm for seven years is £25,200. Plus the existing £40k is £65,200. Which is nowhere near to pay off the £132k mortgage. So I don't understand the plan. I don't understand the £240 and the rest of the stuff on that line either.

Snowdrop08

Sorry Squirrelpie, typo-I missed the K off £240K. 

The plan was to keep saving £100 per month into the main SIPP( £240K )to use the cash lump sum to pay off the largest one (£74500) and £300 pm into the other, £57500 to use the total return over several tax years. All contributions are invested in the stock market. I realise this is maybe too ambitious but I am quite comfortable with the risk. We always agreed that if we had to, we could sell one property to clear both mortgages.