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PostPosted: Tue Aug 15, 2017 9:38 am 
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Hypothetical question.

Say you owned house and were paying a mortgage on it but you also had a reasonable sum of cash in the bank. That cash is enough to buy a small house or flat.

Would you use that money to pay off some/most your mortgage or would you use it to buy another property for renting out, having enough that you are able to avoid having a buy-to-let mortgage which are always at higher rates than a domestic mortgage?


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PostPosted: Tue Aug 15, 2017 10:02 am 
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I am risk averse and I think it is always best to be debt free and own your house outright and it is what I would plump for. At least that way you know your home is safe and at a pinch you could get by on benefits. I have not got the psyche for renting out as I could not stand someone in my property not looking after it etc.

However, another angle is looking forward to a retirement income. Perhaps a compromise would be to buy a house and use the income from it to pay off your main home mortgage quicker?

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PostPosted: Tue Aug 15, 2017 10:15 am 
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Being mortgage free is a wonderful thing (imo).

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PostPosted: Tue Aug 15, 2017 10:25 am 
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If you buy a flat or house as a buy to let investment, it will pay you an income and increase in capital value (depending on house market values for your area and subject to any housing market crashes).

There is such a housing shortage in the UK, I would think bricks and mortar investment is worthwhile and pretty safe.

Paying off the mortgage is the safe option but if you are on a low rate you might be best keeping the long term debt and allow your purchase of another property appreciate in value.

Rental of properties is not straightforward you have to be very very careful to not get stung by a non paying tenant -and the fees / maintenance etc all eat into your return

Or if like France buy some Gites out there and let them out. Brittany of Normandy are both very cheap to buy.


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PostPosted: Tue Aug 15, 2017 10:56 am 
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You have to watch the taxes in France, they are really tough apparently and they can be assessed on World wide assets too.

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PostPosted: Tue Aug 15, 2017 11:22 am 
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I would not invest in property at this time the market is very hit and miss, unless you like the stress being a landlord isn't fun, 1 bad tenant not paying the rent or wrecks the place your out ££££, then you have the up keep, insurance, yearly certs. where I am prices fluctuate +/- 10k a month, most places go for 10-15% over asking

a 2 bed terraced is on average of £300k

personally clear your mortgage/debts then your sorted for life


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PostPosted: Tue Aug 15, 2017 11:36 am 
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"Pay off debts first." I thought that was the "rule"
Buying to rent has a myriad of pitfalls. Bad tenants. Property maintenance. More and more rules for private landlords to comply with.
Buying as a holiday let is a minefield as well. The place often gets treated badly. Repairs, etc. etc.
I'd rather be mortgage free. Due to massive house price inflation in the mid to late 70s. I paid mine off when I was 30, bought a house to do up and haven't looked back.


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PostPosted: Tue Aug 15, 2017 1:36 pm 
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I guess I am looking more at the future income and as others have said using income from a rental property to pay off mortgage on the main house.
Mortgage rates are very low at the moment and so are savings rates, it seems silly to put the money in either when buying a property is likely to be a better source of income over the long term.


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PostPosted: Tue Aug 15, 2017 3:04 pm 
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A safe bet would be a 3-5 year bond (protected index linked) let the money work for you with very low risk - Yorkshire bank has some very good savings accounts (30-60 day notice accounts)


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PostPosted: Tue Aug 15, 2017 3:28 pm 
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I'm lucky enough to be mortgage free and can say that the lack of pressure, stress and worry is truly wonderful (although you get complacent about it over the years :lol: ). Equally we used to have a rental property and it was a right PITA - constant worry, constant expense etc.

Don't get me wrong, I'd get another rental property but this time it would be 'on the doorstep' and a holiday rental rather than a permanent rental so the money is up front and guaranteed - as would be the tenants stay. Holiday rentals command some £300-£500 per week which offsets the time it's not rented (out of season) but, then again, you get a place to use yourself!

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PostPosted: Tue Aug 15, 2017 3:32 pm 
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Some people Ive heard prefer to buy industrial premises as business owners are far less fussy about maintenance.

Very hard to find industrial units for sale though, usually its a whole estate or nothing.

There's that guy who started buying car garages -hes now got thousands of them and has made a tidy living from it!

In all cases the key is to ensure tenants are very thoroughly vetted and insist on a guarantaur if needed.


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PostPosted: Tue Aug 15, 2017 9:25 pm 
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my auntie and uncle have a holliday rental thing next to bamburgh. like a little cottage thing. its canny decent like. they have bookings apart from the odd week right to the end of next year


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PostPosted: Tue Aug 15, 2017 9:54 pm 
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I put a lump sum into a Stocks & Shares ISA just about a year ago, it's returned 5% since opened, and will probably do better once all the Brexit hoo-hah has settled down. The financial advisers we saw were fairly thorough with regard to our attitude to risk assessment and also how much they would allow us to invest, we put 50% of our cash ISA savings into the Stocks & Shares ISA and they wouldn't have let us put more in.

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PostPosted: Wed Aug 16, 2017 8:22 am 
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I'd always decided to be as debt free as possible and brought my first house outright in the late eighties about 9-10 years of work . The second one in which we live now is also paid for although I did need a small loan as we had both at one point. Sold the first and paid off that loan after around six months , we now have no debts and have also have a paid for two third stake in my sister in lards house as well as my parents house which we rent out.
There's , to me at least , a very satisfying feeling to be debt free , to owe nothing to anybody. Our rental property has been fine without problems but I know of others that do have troubles and stress. Our local council run an irregular private landlords forum and it doesn't cost to go along and owning a property isn't even necessary , just introduce oneself as a prospective private landlord , but it is a useful way to learn.
While I do have money in the bank I'm not considering buying another house , I'd much rather put money in other things. PM's are one for instance to act more as a store of one's wealth or buying commodities now as a hedge against inflation is also a good idea and does provide a buffer should there be a sudden economic downturn , which not wanting to sound a bit doomerish looks to be not too far away.


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PostPosted: Wed Aug 16, 2017 3:32 pm 
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I'll add my voice to the "pay off your mortgage" contingent. Unless you count monthly DDs for the phone bill, council tax, and Sky TV etc, I owe nobody anything, and it's a wonderful feeling.

I do suspect the financially astute thing to do would be to buy a house and rent it out -- obviously, through my work I come into contact with a lot of people who do that and they seem to do alright out of it in the main. But in a case of "get more money, have more problems" or "have less money and fewer problems". I will go for the second option every time!

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