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Property vs pension

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    #51
    Originally posted by ChimpMaster View Post
    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.
    Yes, it's always worth putting 5-10% into high risk investments.
    What I do is mentally set my expectations to lose that money, then anything else is a bonus - and sometimes the performance is spectacular.

    One idea that hasn't been discussed is foreign BTL.
    Having divested of BTLs in the Uk, I'm looking to do that i.e. buy a property in Europe. The idea is to get a property in an in-demand area, Air B&B it to make it a cash cow + you can also use it as a holiday home. I like investments that kill a few birds with one stone and this provides: income stream, free holiday accomodation and capital growth, if you choose wisely.
    Portugal for example has no inheritance tax.
    Hard Brexit now!
    #prayfornodeal

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      #52
      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.
      I'm guessing from this you don't have a partner or dependents (or haven't seen high interest rates or spent a long time on the bench).
      With others in your life, it's useful to have your finances in such a way that they will not suffer should something happen to you, but if all your money is locked away in long term investments and they can't easily access them (or it goes to probate), then their family home may well be repossessed.
      …Maybe we ain’t that young anymore

      Comment


        #53
        Originally posted by sasguru View Post
        Yes, it's always worth putting 5-10% into high risk investments.
        What I do is mentally set my expectations to lose that money, then anything else is a bonus - and sometimes the performance is spectacular.

        One idea that hasn't been discussed is foreign BTL.
        Having divested of BTLs in the Uk, I'm looking to do that i.e. buy a property in Europe. The idea is to get a property in an in-demand area, Air B&B it to make it a cash cow + you can also use it as a holiday home. I like investments that kill a few birds with one stone and this provides: income stream, free holiday accomodation and capital growth, if you choose wisely.
        Portugal for example has no inheritance tax.
        That is a really interesting idea.

        Apologies for my daft question, but presumably to Air B&B it when you're not there, a local agent can be used for keys\cleaning and you'd manage booking online?

        Comment


          #54
          Originally posted by gables View Post
          That is a really interesting idea.

          Apologies for my daft question, but presumably to Air B&B it when you're not there, a local agent can be used for keys\cleaning and you'd manage booking online?
          Haven't done it yet, looking to do so, careful research is needed.
          But yes that would be the idea.
          I think there are agents who manage the whole process including booking.
          Hard Brexit now!
          #prayfornodeal

          Comment


            #55
            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.
            Totally agree with this. Even better than BTL is holiday let if you are in area of the country where it is decent to do this. I have holiday let a place this year for the first time. Got punters in through AirBnB and HomeAway network. Surpassed my initial projections by some way. The demand is huge if you price right. Breaks in the UK are booming and will do for some time. As you say also, you get total control of the property and its always tidy. Lots of additional tax advantages with holiday let that you can't get with BTL. Quite a bit of work mind cleaning every week and managing all the bookings!

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              #56
              Originally posted by ChimpMaster View Post
              Good points there.

              And totally agree about not paying off the mortgage ever. What's the point if it's cheap enough?
              Reminds me of the time I questioned my IFA, what's the point of this Accident, Sickness and Unemployment Insurance? I never use it!

              I'd say paying off all debt is a good thing regardless of its cost.
              "Never argue with stupid people, they will drag you down to their level and beat you with experience". Mark Twain

              Comment


                #57
                Would say... although folks call it a 'holiday let', my experience would say this is 40-50% of the business. Being in the city we get many repeat customers. Such as for the Rugby, the finance quarter folks visiting from London, Weddings and funerals, the Festival of course (worth 3 months in one that month), but September is usually better as a US mum will book out the entire place for their siblings freshers week / the first month of uni etc. Point is, location is more important than focusing on purpose, i.e. holiday let. I'd go multi purpose every time.

                Agree about pricing, keep it low, don't get greedy. It is better to have turnover than too many voids in the calendar.
                "Never argue with stupid people, they will drag you down to their level and beat you with experience". Mark Twain

                Comment


                  #58
                  Originally posted by scooterscot View Post
                  Reminds me of the time I questioned my IFA, what's the point of this Accident, Sickness and Unemployment Insurance? I never use it!
                  It's for the 5% of people who get hit by that "bus", survive and are unable to work for a while.
                  "You’re just a bad memory who doesn’t know when to go away" JR

                  Comment


                    #59
                    Originally posted by WTFH View Post
                    I'm guessing from this you don't have a partner or dependents (or haven't seen high interest rates or spent a long time on the bench).
                    With others in your life, it's useful to have your finances in such a way that they will not suffer should something happen to you, but if all your money is locked away in long term investments and they can't easily access them (or it goes to probate), then their family home may well be repossessed.
                    You guess wrong I have both partner and dependents, I structure my finances accordingly. I will concede that the investments I have are in part easily accessible (ISA's).
                    If I croak suddenly, my life insurance pays off the house and provides a ready surplus, this is structured to pay direct to my partner, not the estate.
                    Similarly, the SIPP is externally held outside my estate for obvious reasons and covers longer term requirements.
                    While not ready to retire I am keen to be financially independent so that I can maintain my lifestyle immune to needing to work.
                    For me, that entails taking some calculated risk and investing in global markets as I cannot find a better way to generate the returns needed.
                    I see this as my plan B and have spent a long time getting to grips with it.
                    I would see property as the only reasonable alternative but BTL would definitely not suit me, I would just use a REIT or Commercial property trust (e.g. FCPT) to increase my exposure.
                    Good Luck all...

                    Comment


                      #60
                      Originally posted by lukemg View Post
                      If I croak suddenly, my life insurance pays off the house and provides a ready surplus, this is structured to pay direct to my partner, not the estate.
                      OK, so how much do you pay per month into life insurance (which has a zero return while you are alive), compared with how much you pay in interest on the mortgage?
                      You said you saw paying off the mortgage as a waste, but you pay into an insurance policy instead.
                      For someone focused on the returns, is paying into an insurance policy a better investment than paying down the mortgage?
                      …Maybe we ain’t that young anymore

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