Pay Off Mortgage or Buy a Second House?

Adamc

Hi 

In the scenario where you had the savings to be able to put a deposit down on a small additional property (and could afford the mortgage repayments), with the intention to rent it out, or overpay the mortgage on your own property ... which, generally, would be the better investment? 

MaryNB

There are far to many factors to consider.

What's your expected rental yield? Can you afford two mortgages if they stop paying rent? Will you be paying letting fees or self managing? Is there work that needs doing before you can rent it out? Is it worth the +3% SDLT on your second home?

Personally I would overpay. I never want to be a landlord. 

dimbo61

https://forums.moneysavingexpert.com/discussion/5180214/tenancies-in-eng-wales-guides-for-landlords-and-tenants/p1

The post above covers just some of the many rules, regs ,laws and obligations that a Landlord needs to comply with before renting a property.
I am a Landlord and I am available 24/7 for my tenants, We have a team of tradespeople who I can call upon 24/7 to fix a broken window or blocked toilet, reassure a tenant after a break-in and sort emergency repairs.
I HAVE to comply with the law and Fire safety, with smoke alarms and carbon monoxide alarms. 
Fit for habitation checks, 
Safety and security
EPC, EICR, GCS, Pat testing etc.
Overpaying the mortgage is simple 

grumiofoundation

Why are they the only 2 options you are considering? 

If you want to invest rather than pay off mortgage there are other investments other than rental property - stocks and shares? And these are easier (see above for some of work needed to be landlord) and more tax efficient (if invest via pension or ISA) and may well end up more profitable as well. 

https://forums.moneysavingexpert.com/categories/savings-investments

https://forums.moneysavingexpert.com/categories/pensions-annuities-retirement-planning

csgohan4

I opted not to overpay mortgage and put it in S+S ISA, although I am below 60% LTV which helps. My ISA yield is far higher than the interest I am losing

george4064

Option 3. Invest the money in either pensions and/or S&S ISA.

Adamc

csgohan4 said:

I opted not to overpay mortgage and put it in S+S ISA, although I am below 60% LTV which helps. My ISA yield is far higher than the interest I am losing

Could I ask how you first got into this? Do you manage these investments yourself or have someone do it for you? For me there would be an initial learning curve but I am very interested. 

Adamc

george4064 said:

Option 3. Invest the money in either pensions and/or S&S ISA.

How did you get into this initially?

Could you point me in the direction of some resources to look into these options? They're totally new to me but I'd like to know more. 

csgohan4

monevator website is a good starting point for passive investing and I manage it myself, keep it simple and have a strategy

Do not invest in individual shares as a beginner, if you want sleep well at night

Adamc

csgohan4 said:

monevator website is a good starting point for passive investing and I manage it myself, keep it simple and have a strategy

Do not invest in individual shares as a beginner, if you want sleep well at night

Thanks - Which platform do you use and do you have any further informative resources?

csgohan4

Adamc said:

csgohan4 said:

monevator website is a good starting point for passive investing and I manage it myself, keep it simple and have a strategy

Do not invest in individual shares as a beginner, if you want sleep well at night

Thanks - Which platform do you use and do you have any further informative resources?

monevator has a platform comparison as well and will very much depend on what fund types you prefer