Buying a house outright - views please

[vista]

Big plus

That is a very good point, running costs should be fine, hell you could work at Tesco or Burger King and make enough for house running costs if you have no mortgage - assuming your kids don't go to most expensive private schools

This is why I paid off my mortgage, £220K mortgage on a house worth £400K at the time but for me it all boiled down to the security of having somewhere to live whatever happens next to me and never ever having to regret the hair brained idea I would have sunk/wasted £250K into instead ;-)

The £500K barrier is also very real my house hit £500K real quick but has remained stubbornly on or around this number for the last year 18 months.

Now all I have to do is buy another house to live in, sell this one and start dumping the cash into a pension with 40% tax relief turning my pension from 500K to 700K. (I'm hoping this idea illicits some better ideas?)

[bobhope]

This is why I paid off my mortgage, £220K mortgage on a house worth £400K at the time but for me it all boiled down to the security of having somewhere to live whatever happens next to me and never ever having to regret the hair brained idea I would have sunk/wasted £250K into instead ;-)

The £500K barrier is also very real my house hit £500K real quick but has remained stubbornly on or around this number for the last year 18 months.

Now all I have to do is buy another house to live in, sell this one and start dumping the cash into a pension with 40% tax relief turning my pension from 500K to 700K. (I'm hoping this idea illicits some better ideas?)

You only get tax relief on up to a maximum of your net earnings for the year or ~200k, whichever is the lesser.

[gables]

This is why I paid off my mortgage, £220K mortgage on a house worth £400K at the time but for me it all boiled down to the security of having somewhere to live whatever happens next to me and never ever having to regret the hair brained idea I would have sunk/wasted £250K into instead ;-)

The £500K barrier is also very real my house hit £500K real quick but has remained stubbornly on or around this number for the last year 18 months.

Now all I have to do is buy another house to live in, sell this one and start dumping the cash into a pension with 40% tax relief turning my pension from 500K to 700K. (I'm hoping this idea illicits some better ideas?)

That's an interesting point about the 500K \ 4% barrier, already mentioned but one I hadn't even thought about. Begs the question, for me whether we'd be better to pay off the mortgage by buying outright (round here we're talking a 4 bed detached), hopefully this would grow at a faster rate than the house we currently have due to the barrier so the gain would be bigger, and at the same time put the mortgage payments into savings\investments\pension.

[glashIFA@Paramount]

You only get tax relief on up to a maximum of your net earnings for the year or ~200k, whichever is the lesser.

If you're set up as a ltd company you can get a bit of latitude with the level of contribution if it's made by the company. Needs to be wholey and exclusively for the purpose of the trade. All down to the Local Inspector of Taxes so different thoughts in different parts of country.

You could invest into the development of residential property over commercial property - this gives tax breaks at your highest marginal rate. Shorter term than pensions and all monies available at the end.

[MarillionFan]

"Maybe talk to MF and buy some Thai Tat?"

Going cheap.

[SandyDown]

I really can't believe people here think investing in pension funds is a good thing to do - does anyone remember any of the pension scams?

[gables]

I really can't believe people here think investing in pension funds is a good thing to do - does anyone remember any of the pension scams?

Agreed, and whilst I mentioned it in my last post, I have real difficulty gaining confidence in them. It's what to do instead?

[donaldduke]

Just wondered what the view from the pub floor would be on the following.

Let's say you have a house worth £450K with a mortgage on it of £180K, for £250K you could buy a house that would be big enough (the current house is too big anyway) and in a nice enough area, would it be wise to sell up and buy outright, thus having no mortgage? Or would this be a daft thing to do?

I'm trying to think of all of the pros and cons.

Daft,

12 years from now your house will be worth 900K, while the other one
will be worth just 500.

My plan would be to get the mortgage down to 150, then down to 100K, over the next few years or so.

The transactions costs of downsizing will be almost years worth of interrest payments on your 180K mortgage anyway.

A mortgage at 6% is not a bad thing. The real rate on inflation (the rate at which new money is being created by the banks and bank of england) is much higher than 6%.

Should you hit bad times you can always remove equity from the house until things improve.

[vista]

Pension

I really can't believe people here think investing in pension funds is a good thing to do - does anyone remember any of the pension scams?

Agreed but if your purchasing a 'defined benefits' pension administered by your good self the chances of getting hosed are tiny (bar stock market crashes assuming a tracker). You have to do something about a pension because of the 40% tax break, if you make alternative arrangements you're still gonna have to pay tax on the income so you may as well get the tax break on the way in.

[expat]

A mortgage at 6% is not a bad thing. The real rate on inflation (the rate at which new money is being created by the banks and bank of england) is much higher than 6%.

Surely it's only a good thing if the rate at which you personally are coining it is higher than 6%?