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Property vs pension

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    #41
    Originally posted by Fred Bloggs View Post
    Pssstt...... You're right. Look up there some place. Regional REIT, >8% dividend, tax free in an ISA. But don't tell everyone.
    Pssstt.... US is about to wavier tax duty on bitcoin gains. But don't tell everyone.
    "Never argue with stupid people, they will drag you down to their level and beat you with experience". Mark Twain

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      #42
      BTL is played out nothing to be made other than loooooonnnng term. If that's all avalibe why not invest in your own house and gets some benefit. Build/extend/buy.
      I'm not counting on a pension to to look after me in retirement (when ever that is) spread the risk.

      While their is demand for housing ownership and not enough supply I don't a long term reduction in property values. Only way to stop it is to build like crazy.

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        #43
        If you must have BTL, my recommendation is airbnb or similar. The benefits are the property stays in top notch condition year round, so if you need to sell quickly it looks good. Returns are 2-3 fold on short assured tenancy (or so they seem to be with my Edinburgh place). And finally, you can use the property at a time of your choosing.
        "Never argue with stupid people, they will drag you down to their level and beat you with experience". Mark Twain

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          #44
          Originally posted by scooterscot View Post
          If you must have BTL, my recommendation is airbnb or similar. The benefits are the property stays in top notch condition year round, so if you need to sell quickly it looks good. Returns are 2-3 fold on short assured tenancy (or so they seem to be with my Edinburgh place). And finally, you can use the property at a time of your choosing.
          AirBnB is very hands on unless you get someone to manage it for you.

          There is still money in BTL so long as you structure it correctly and buy with yield in mind rather than expectation of price growth. And BTLs do not have to be hands on; we have given a house to a private sector leasing company for slightly less than market rent but they take it for 3 or 5 years and you don't hear a peep. Simple.

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            #45
            Originally posted by ChimpMaster View Post
            AirBnB is very hands on unless you get someone to manage it for you.
            Agreed - I spend 50% of my turnover employing someone to turn the place around.
            "Never argue with stupid people, they will drag you down to their level and beat you with experience". Mark Twain

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              #46
              Originally posted by TheCyclingProgrammer View Post
              I think I started a thread on here earlier this year about long term planning and the fact I still have no pension. I still haven't sorted anything out.

              Simplest option seemed to be start a SIPP, pay in whatever I can as a company contribution and forget about it. I worked out for a half decent return, I'd need to put £20k in a year over the next 30 years to end up with a decent pension pot, enough to generate an annual income of around £20-25k or so. This, combined with the fact that once the money's in the pot, it's gone for the next 20 years (I'm nearly 35) made me hesitant.

              OTOH, it occurred to me that I could very easily save up enough money in 2-3 years time to buy a property and rent it out. Maybe over time I could afford to get a few. I've never really given much thought to being a landlord and I know the government keeps trying to make it less appealing in terms of tax efficiency but the idea of investing money in property seems more appealing and is probably a fairly safe bet long term.

              This is of course all dependent on me being able to get a second mortgage and it's not without its risks.

              An age old debate, I'm sure, but what would you do?
              When you're 45 you'll wish you had put some money into a pension ;-)

              At the moment there's a decent tax break on pensions so you're not actually putting £20k in a year but £16k from the company (corp tax reduction).
              If you took that £16k out you'd be paying tax on it, probably at 40% so it's more like getting £20k value for £10k input. Not bad.
              Even at conservative estimates you'll get your £24k a year from that (plus £8k state pension if it's still around) plus £180k tax free cash (25% of pot)!

              That's not too bad. You can also afford to make more risky investments - emerging markets, small companies etc. and perhaps beat the conservative growth estimate by a lot.

              Finally, annuities have been really bad recently - around £4-5k per year per £100k in your pension. They're getting better again though. When you retire you might find that you're getting £8k per £100k and end up with over £40k a year instead of £24k.

              ISA's also look pretty good though putting in cash after tax seems painful. The tax free income will mount up in the future and be very handy.

              The main concern at the moment is that markets are looking a bit high and there'll inevitably be a crash in the next few years. With a 30 year horizon though you're in a great place to get started early, weather the storms and have a solid retirement income.

              Alternatively, fast women and hot cars beckon, at least until you retire ;-)

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                #47
                Originally posted by poorautojobber View Post
                BTL is played out nothing to be made other than loooooonnnng term. If that's all avalibe why not invest in your own house and gets some benefit. Build/extend/buy.
                I'm not counting on a pension to to look after me in retirement (when ever that is) spread the risk.

                While their is demand for housing ownership and not enough supply I don't a long term reduction in property values. Only way to stop it is to build like crazy.
                We have invested a decent chunk of money in our house - and we must have timed it right as we bought here just before the house prices started going up. Last remortgage valuation (not a desktop valuation but actual survey) was £60k over what we paid 2.5 years ago (a few EA valuations were £10-30k more than this but taken with a massive pinch of salt).

                We’ve refurbished top to bottom, had the garden relandscaped and had a garden studio built. There’s nothing more to extend really, it’s about as extended as it will get short of demolishing the conservatory and having a proper full width downstairs extension (probably not worth the time or money). At a rough estimate we must have spent at least £60k (half of that on the garden and studio).

                So we are about as invested in the house as we can be and plan to be here for at least the next 10 years. In fact, we don’t intend to move more than one more time because it’s not something I want to make a habit of. So I’m with you on investing in your own home.

                We can afford to overpay our mortgage but is there really much point when you’re on a fixed rate of about 1.6% for the next 3 years? Based on the last valuation we must be on about 65% LTV now.

                Lots of useful stuff to think about in this thread anyway.

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                  #48
                  Originally posted by TheCyclingProgrammer View Post
                  We can afford to overpay our mortgage but is there really much point when you’re on a fixed rate of about 1.6% for the next 3 years?

                  I think it's worth considering. You may not be in a position to overpay (at all or as much) in the future and after the end of the fixed rate term the rate you go onto may cost more in interest than you'd overpay now.

                  Try some of those overpayment calculators to see how much difference it makes to the overall cost of the mortgage if overpaying now as opposed to later on or not at all, with various possible interest rates along the way.
                  Maybe tomorrow, I'll want to settle down. Until tomorrow, I'll just keep moving on.

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                    #49
                    Originally posted by Hobosapien View Post
                    I think it's worth considering. You may not be in a position to overpay (at all or as much) in the future and after the end of the fixed rate term the rate you go onto may cost more in interest than you'd overpay now.

                    Try some of those overpayment calculators to see how much difference it makes to the overall cost of the mortgage if overpaying now as opposed to later on or not at all, with various possible interest rates along the way.
                    It's probably a good idea for many because it imposes discipline and they can just get used to the bigger payments.
                    Personally, it is a bad idea for me when I can use the capital elsewhere to get many times my mortgage rate in returns. You need to see your house as just one of your investments and take a global view of every asset and liability.
                    The downside is you end up with a massive asset you can't easily liquidate part of, hence all the equity release schemes which always look a bad deal to me but many have no choice because they insisted on paying off the mortgage.
                    That's before we get to IHT which, even with the increased allowance for housing will likely be swallowed up.
                    I couldn't care less if I owe half the house to a bank when I croak, they can take their chunk out. The money I have saved not paying into that will be kicking out dividends in a SIPP or ISA.

                    Comment


                      #50
                      Originally posted by lukemg View Post
                      It's probably a good idea for many because it imposes discipline and they can just get used to the bigger payments.
                      Personally, it is a bad idea for me when I can use the capital elsewhere to get many times my mortgage rate in returns. You need to see your house as just one of your investments and take a global view of every asset and liability.
                      The downside is you end up with a massive asset you can't easily liquidate part of, hence all the equity release schemes which always look a bad deal to me but many have no choice because they insisted on paying off the mortgage.
                      That's before we get to IHT which, even with the increased allowance for housing will likely be swallowed up.
                      I couldn't care less if I owe half the house to a bank when I croak, they can take their chunk out. The money I have saved not paying into that will be kicking out dividends in a SIPP or ISA.
                      Good points there.

                      I was always brought up with the mindset that "debt is bad" so my aim was always to pay off mortgages. I did this back around 2007/8 but the stupid thing was that interest rates crashed soon after so I would have been better off keeping a mortgage and paying the paltry 0.5% rate I would have been on.

                      So anyway we kept the property unencumbered and then a couple of years ago released 40% equity, which I used to pay off more expensive BTL loans. Money better spent in my books.

                      And totally agree about not paying off the mortgage ever. What's the point if it's cheap enough? Right now I have fixed it for 5 years on an offset mortgage and if rates stay low I'll do it again when it's up for renewal.

                      But you've got to have something else to invest that chunk of money in, something low/medium risk. In my view/experience it would be another property where the rent pays off the loan over time. Clearly others prefer equities/markets while others go in for the big risk items like cryptos. If you have sufficient funds I would go for a BTL, some equity/market funds and a small % in cryptos or other high risk investments. Something like a 70/25/5% split.

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