Pay off mortgage or BTL

[SlipTheJab]

So I have around 80k left on a 215k mortgage for a house now worth around 300k. Been chipping away at it and I reckon in 2 years I could be mortgage free. Plan B says don't do that and use the cash for a couple of BTLs instead (looking at 100-150k properties so 40k deposit on each). Reasons for BTLs is to give one each to the 2 kids eventually as a head start when they are old enough (6 and 4 now). So better 2 pay off or BTL, thoughts?

[BrilloPad]

BTL. ZIRP is here to stay.

[WTFH]

For me, pay off your debts before taking on new ones (even though they are investments). That way if there is a very rainy day when you have no money, you don't have to worry about losing your house, whereas, if you have no money, no tenants and 3 mortgages, you'd be a bit worried.


...then again, I'm not a big risk taker when it comes to investments.

[Lightwave]

BTL. ZIRP is here to stay.

For at least another 3 months?

When I first looked at BTL, a long time ago, I was advised that I needed to budget for 10% interest rates.

What would you suggest as an interest rate to survive?

Also BTL interest rates seem somewhat decoupled from the ZIRP base rate.

IMHO, interest rates COULD go up quite quickly as and when the US and Chinese make it so.
That MIGHT precipitate a fall (10% 20%) in house prices short term.
Could you tough that out?
Could you sell quick enough to get out from under?
How sure are you it's not going to happen? 80% 95% 99.9%?
How sure do you need to be?
And when Osborne fails to balance the books by raping contractors, do you think BTL might be the next target?
If you've got any better targets, I think Mr O would like to hear about them.

So personally, I would want a very stout margin to cover interest rate and tax risk, as well as letting agent costs and voids.
But in the long run I believe property is a fair hedge against inflation, I do not believe a return to the so-called norm of 'OK house for 3x salary' is on the cards.

But I could be wrong.
But I understand the risks of being wrong.

[FatLazyContractor]

Reasons for BTLs is to give one each to the 2 kids eventually as a head start when they are old enough (6 and 4 now). So better 2 pay off or BTL, thoughts?

Really ?!!!!

Let the spongers get their own. Eventually they will throw you in a care home.

Pay off your debts.

[Intel]

So I have around 80k left on a 215k mortgage for a house now worth around 300k. Been chipping away at it and I reckon in 2 years I could be mortgage free. Plan B says don't do that and use the cash for a couple of BTLs instead (looking at 100-150k properties so 40k deposit on each). Reasons for BTLs is to give one each to the 2 kids eventually as a head start when they are old enough (6 and 4 now). So better 2 pay off or BTL, thoughts?

All depends on your attitude to risk. I paid off my mortgage this year and can look forward to bench time where I no longer give a damn about whether I have anything lined up or not.

Peace of mind is priceless....

[MarillionFan]

So I have around 80k left on a 215k mortgage for a house now worth around 300k. Been chipping away at it and I reckon in 2 years I could be mortgage free. Plan B says don't do that and use the cash for a couple of BTLs instead (looking at 100-150k properties so 40k deposit on each). Reasons for BTLs is to give one each to the 2 kids eventually as a head start when they are old enough (6 and 4 now). So better 2 pay off or BTL, thoughts?

What's your overall ROI?

I have a 425k interest only mortgage which I pay the grand sum of 0.98% on it and have had it for 7 years, never paying a penny off it.
I also have the 425K spread out over two buy to lets and in cash ISA's/bonds returning an average of 6% per year.

Should I pay off my mortgage? I'll let you do the maths.

[diseasex]

Really ?!!!!

Let the spongers get their own. Eventually they will throw you in a care home.

Pay off your debts.

The real question is : will BTL properties pocket you more than you pay interest on the mortgage? Probably it will , even if rates will go up.
Don't know whats your mortgage rate but mine , currently, is like 1.9% and even simple saving account yields me more interest, so no way im repaying that early

think of this concept : you borrow @ 3% (your mortgage rate ) and earn 8% (your BTL yield) = 5% profit

[northernladuk]

I'm with the BTL crowd. A mortgage isn't a debt in the same sense as loans, credit cards etc. It's one of those facts of life for most people. If you plan to still be working when it's due to be paid then just carry on as you always have. You'll save the mortgage money if you've paid it off but it's pretty bloody useless as you won't have enough to invest with for years. Paying the mortgage off is a lifestyle change, not a chance to invest in most cases.

Use the lump sum on BTL's I'd say.

There is a halfway here.. Get an offset mortgage and the money can be sitting there paying the mortgage off early until you need it so best of both worlds.

[WTFH]

Don't know whats your mortgage rate but mine , currently, is like 1.9% and even simple saving account yields me more interest, so no way im repaying that early

Surely that logic is flawed - "no way am I repaying it early" - in other words you could repay it now, but you'd prefer to wait until the interest rate goes up so you have to repay more money in interest to clear the debt.


"Would you prefer to pay £100 today, or £120 next week? Oh, I'll wait until next week cause then I still have my £100 for an extra week"



£100k mortgage over 25 years at 1.9% = £125,701 total
£100k mortgage over 25 years at 2.9% = £140,708 total.
A 1% increase in your mortgage in this example = a 15% increase in the loan.


So, pay off the mortgage now, then when you have the cash and the interest rates have gone up, you know what, the savings rates will go up too.

There is a halfway here.. Get an offset mortgage and the money can be sitting there paying the mortgage off early until you need it so best of both worlds.

That's what I have. It also means that should something happen to me, my wife won't need to sell the house straight away because she can't afford the mortgage - there's enough in the pot to last a few years of repayments.