Do I want to be MF? What to do with cash lump sum?
chocolatefish
Posts: 46 Forumite
Hi all
I am new to these boards so thanks in advance for any advice in finding my way through the money maze.
Situation: my partner and I currently have a mortgage (about 68K on a flat). We are living overseas and the flat is rented. The rental income (after taking off agent fees, repairs etc) does not cover the mortgage, so each year we make a loss of a couple of K's. We may return to the UK at some point, but are unlikely to live i the flat for long if we do. We are not currently resident in the UK for tax purposes, nor ordinarily resident.
We are about to receive around 90K from my parents as a gift / IHT avoidance and we are exploring our options of what to do with the money. Among the options we have are paying off the mortgage on the flat. The way I see it, this would result in us having the rental as an income in the UK and not paying 1,000's GBP in interest over 23 years to the bank. Mr CF though says that technically we are not paying the mortgage and interest - our tenants are (more or less), and that we should maybe look at investing the money elsewhere. I'm not convinced by his reasoning!!
One thing to bear in mind is that it's sometimes difficult to open new financial products from overseas - many companies insist that their products are only available to UK residents.
Any advice??
I am new to these boards so thanks in advance for any advice in finding my way through the money maze.
Situation: my partner and I currently have a mortgage (about 68K on a flat). We are living overseas and the flat is rented. The rental income (after taking off agent fees, repairs etc) does not cover the mortgage, so each year we make a loss of a couple of K's. We may return to the UK at some point, but are unlikely to live i the flat for long if we do. We are not currently resident in the UK for tax purposes, nor ordinarily resident.
We are about to receive around 90K from my parents as a gift / IHT avoidance and we are exploring our options of what to do with the money. Among the options we have are paying off the mortgage on the flat. The way I see it, this would result in us having the rental as an income in the UK and not paying 1,000's GBP in interest over 23 years to the bank. Mr CF though says that technically we are not paying the mortgage and interest - our tenants are (more or less), and that we should maybe look at investing the money elsewhere. I'm not convinced by his reasoning!!
One thing to bear in mind is that it's sometimes difficult to open new financial products from overseas - many companies insist that their products are only available to UK residents.
Any advice??
0
Comments
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While your tenants are thoretically paying the mortgage, it's still your debt. If you lose the tenants, you will still have to pay the loan.
You could always use some of it against the mortgage - at least get the rent so it is equal with the mortgage, then invest the rest?0 -
I was in a similar situation to you in that I rented out my property while renting elsewhere (though not abroad). I paid off the mortgage when I was able to and it felt great to be totally debt free. So, my heart says "pay off your mortgage".
My head says that there may be tax advantages in retaining the mortgage if you're resident abroad so get professional advice before deciding what to do.0
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