Debt in retirement

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  • dimbo61
    dimbo61 Posts: 13,712
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    With the changes in taxation for rental interest and the costs involved in maintaining 9 properties you need to review your whole portfolio and financing of the loans.
    Time to employ an accountant and maybe BTL mortgage broker.
    Would you be better having 5/6 houses that are mortgage free rather than 9 with large debts.
    Can you get better deals or start paying down the debt ?
    Maybe a limited company ?
  • Jaco70
    Jaco70 Posts: 177
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    Thanks. Yes I think 26k plus state pension, plus small personal pension should be adequate and I don’t really see rental prices falling anytime soon. If anytime they seem to be climbing slightly.
    My concern related more to still being in debt in retirement, as I don’t really see a windfall coming my way to pay them off, or house price rises of the type we became used to. If the portfolio doubled in value, as was common in years gone by, I wouldn’t have any concerns, but I don’t see those days returning (which in general is surely a good thing).
    Selling houses would reduce my debt a bit but also reduce my income, which is counter productive.
    I think I need to worry less about carrying a bit of debt in old age.
    Thanks again.
  • Thrugelmir
    Thrugelmir Posts: 89,546
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    What's your plan if interest rates were to rise?

    In disposing of a property you may incur a void period (loss of income) plus a Capital Gains Tax liability. Which will take the shine off your investment. Planning your exit route needs consideration and planning.
  • Jaco70
    Jaco70 Posts: 177
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    Yes I get what you’re saying but my plan has always been to hand the properties on rather than cash them in.
    I totally understand that priorities change, particularly if the kids do well and aren’t interested in taking over budget rentals, but I can’t possibly predict that, so at the moment the plan is to hold on long term.
  • Thrugelmir
    Thrugelmir Posts: 89,546
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    edited 16 November 2019 at 10:41PM
    Jaco70 wrote: »
    Yes I get what you’re saying but my plan has always been to hand the properties on rather than cash them in.

    You might live 40+ years yet. Decisions might change in that timeframe. For a whole variety of reasons.

    You might avoid CGT. Though not IHT in the end.
  • Jaco70
    Jaco70 Posts: 177
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    Thanks again for that. At the moment CGT isn’t a concern for me as I don’t wish to offload any. And IHT, if my net worth eventually makes that an issue, may have to be a problem for the kids to deal with.
    The one thing that has worked in my favour is the types of property I bought, basic 2 or 3 bed freehold terraced houses opening directly onto the street. I say this because at the time the ‘smart’ money was going into new build flats or student houses, where the yields were much greater, and I was seen as a bit of a plodder, but now we have a definite over-supply of the other types but a steady stream of tenants looking for basic houses in the £ 500-600 pcm bracket.
  • Sea_Shell
    Sea_Shell Posts: 9,272
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    Thrugelmir wrote: »
    You might live 40+ years yet. Decisions might change in that timeframe. For a whole variety of reasons.

    You might avoid CGT. Though not IHT in the end.

    Exactly this.

    It's ok to have plan A. However, keep the options of plan B or C open to you. It's ok to change your mind.

    "Life is what happens to you, while you're busy making other plans"

    Also...don't promise the kids anything. There might not be anything left...you never know!!
    How's it going, AKA, Nutwatch? - 12 month spends to date = 2.47% of current retirement "pot" (as at end February 2024)
  • robatwork
    robatwork Posts: 7,086
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    You may want to make your next "what if" post on the Pensions board - one of the most helpful forums and real experts on the topic. Not to say you didn't get some great advice here of course!
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