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Use lump sum to BTL?
Slug62
Posts: 4 Newbie
I have a BTL with a £135K mortgage which I have had for four-and-a-half. Profits are low, but always bought it with the idea that one day one of our three children could live in it one day. Mortgage will rise in Dec from £250pm to £556, meaning after tax I would make £2,200 a year. Have had a decent couple for 13 years.
I recently had a £150K windfall - property related. My husband his sister are selling his late father's property, a share of freehold flat in a desirable part of our town. We would be able to use that £150K plus savings, to buy out his sister. We would have £40K savings left, plus shares worth around £75K. I work in a £40K pa job, he's a pensioner.
This second property would be mortgage free and would rent for £1200pm, I am told. However, it's a 60s block, with a £1800 pa service charge. There are works upcoming, fire doors and possibly the lift for which one-off payments may well be sought. Also there may well be voids, because the property would rented to young professionals.
My brother says I should put my money into buying another BTL, as property will always do well. My mortgage broker tells me to pay off the £135K. My accountant says don't pay off the £135K, let it bubble along, but don't touch any more property because of CGT and IHT and to invest in granny bonds.
My gut tells me to go for this flat, if the sister agrees to a price (we would get a survey). I have three children in their 20s who would only get on the ladder after we die and, even with all the restrictions on landlords, and future energy ratings, property will always increase, plus there is an asset at the end of it.
Husband is less risk-averse than me. We are both wary of CGT but wonder if appreciation of the asset and a future roof over the heads of the children might be a price worth paying? Or am I being ridiculous, given all the tax increases and requirements landlords are having to face?
I really would welcome some guidance
I recently had a £150K windfall - property related. My husband his sister are selling his late father's property, a share of freehold flat in a desirable part of our town. We would be able to use that £150K plus savings, to buy out his sister. We would have £40K savings left, plus shares worth around £75K. I work in a £40K pa job, he's a pensioner.
This second property would be mortgage free and would rent for £1200pm, I am told. However, it's a 60s block, with a £1800 pa service charge. There are works upcoming, fire doors and possibly the lift for which one-off payments may well be sought. Also there may well be voids, because the property would rented to young professionals.
My brother says I should put my money into buying another BTL, as property will always do well. My mortgage broker tells me to pay off the £135K. My accountant says don't pay off the £135K, let it bubble along, but don't touch any more property because of CGT and IHT and to invest in granny bonds.
My gut tells me to go for this flat, if the sister agrees to a price (we would get a survey). I have three children in their 20s who would only get on the ladder after we die and, even with all the restrictions on landlords, and future energy ratings, property will always increase, plus there is an asset at the end of it.
Husband is less risk-averse than me. We are both wary of CGT but wonder if appreciation of the asset and a future roof over the heads of the children might be a price worth paying? Or am I being ridiculous, given all the tax increases and requirements landlords are having to face?
I really would welcome some guidance
0
Comments
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I would not go the BTL route, and I would look to pay of any "debt" / mortgage, then possibly look at "investing" in a pension...but that's juts me...
.."It's everybody's fault but mine...."0 -
The £150k could be a £50,000 deposit for each of your kids.
They can buy someone to suit themselves with a 10/15% deposit.
Or go traveling2 -
if you were to not go down the BTL route, you should first compare what your expected return on the pension is before paying off the mortgage, if the return is higher (likely) why pay off the mortgage first (subject to interest rate)?Stubod said:I would not go the BTL route, and I would look to pay of any "debt" / mortgage, then possibly look at "investing" in a pension...but that's juts me...
too generic advise0 -
...obviously...too generic question....
.."It's everybody's fault but mine...."1 -
property is starting to fall, new rules on renting and lifts.....Don't put your trust into an Experian score - it is not a number any bank will ever use & it is generally a waste of money to purchase it. They are also selling you insurance you dont need.0
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Not too sure they were offering advice, rather just their opinion.Schwarzwald said:
if you were to not go down the BTL route, you should first compare what your expected return on the pension is before paying off the mortgage, if the return is higher (likely) why pay off the mortgage first (subject to interest rate)?Stubod said:I would not go the BTL route, and I would look to pay of any "debt" / mortgage, then possibly look at "investing" in a pension...but that's juts me...
too generic advise
Having looked into buying a BTL over the last few months, the returns weren’t great, and the changes that have/are about to occur made it a non viable option for us. I’d either pay the current mortgage, give some money to the kids or just spend it. You can’t take it with you when you die.2006 LBM £28,000+ in debt.
2021 mortgage and debt free, working part time and living the dream0 -
Thank you all. Will have a look at investment options0
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