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Lex Further
Posted: 04 May 2024 18:03:24(UTC)
#12

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I paid off my mortgage 3 months ago and that felt amazing. Was paying it for the last 15 years , so now i finally can feel free again. I know i wouldn't be able to do it without a help of financial services, so will add something to the Corpay reviews when i finally put my thoughts together and have enough time for that.
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MBA MBA
Posted: 04 May 2024 18:55:56(UTC)
#9

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Newbie;304746 wrote:
MBA MBA;304738 wrote:
Newbie;304730 wrote:
Outstanding Mortgage - £1.2m against £2.5m property at last valuation
£500k taken out in 2020 to put in markets (took out £1m in 2009 - then repaid some and took out more in 2014)
Have ability to repay mortgage from investment portfolio without touching UK BTL or UK pensions.
Want to max out ISA's and pensions for children - (Not particularly happy with the level of taxes paid by myself let alone whole family and still struggle to get my bins collected, an appointment to see a GP or the streets repaired)


What the heck do you and partner do for a living? Banking masters of the universe? You sound totally on it.

Don’t you fear that the markets may sink and you can’t pay down your mortgage?

Do you hold much cash or cash like securities?

BTL is becoming a hard game and once Lab get in they’ll go for BTL further:

Definitely not masters of the universe though my annual tax bill is approx six figures - (will breach this year and this after putting the max in pensions - hence why made comment about maxing out for children)

Mortgage not a major worry - as pointed out portfolio will more than cover it.

Have options maturing on add to this. Then there is the BTL. On top is the the EBT and other pensions.

If markets sink then will obviously hurt but more worrying is loss of income and annual bonuses which will impede lifestyle. Just need to ensure that if markets sink then have enough cash or assets on call so as not to call upon portfolio. The exception is the share options which have to be realised - but can use losses to offset future gains but only if still in role.

Try and keep approx £250k in cash/like holdings (though down to £200k now as topped up children's pensions and ISA's) - should cover a couple of years expenses. Can also access pensions including 25% TFC.

BTL is not an investment strategy for me but an investment strategy for my future generations as are some of the pensions. Labour coming after them will hurt people who rely on income or are heavily geared through necessity - for ourselves it is by choice and bought for long term growth. The BTL's (and main residence to an extent) are there to help get access to finances at competitive rates whilst still earning and making use of available tax breaks. (FWIW We have paid off our mortgage in full 4 times already and then drawn monies out again for opportunities - in the last 20 years)

Our BTL portfolio are generally 3 bed semi-detached houses so can easily move into one if we hit s**ts creek.

The three biggest worries for me are
- Loss of income though unlikely to put me in the streets just yet unless
- family separation ie divorce and any settlement - be it myself or family members
- HMRC - As above my annual tax bill has started breaching six figures.

Wife has her own P/T Income and finances (though still a HRT payer) and puts all she earns into Gold and property and for children. As for normal expenditure (including replacing the car and its associated costs), she tends to misplace her debit or credit cards for her own accounts and raids the joint account. It is one of the reasons why I have shares in the likes of Amazon, M&S. If John Lewis had shares I would buy them also.

For home repairs and upkeep that apparently is a gentleman's duty even if the gentleman has no say as to what is being done, all on the basis that it is a lady that makes it a home for a gentleman to live in.


Thanks for replying. You’re on another level to me but total respect to you. Best wishes.

I will have a. £525k mortgage in 2.5 years (my wife has about half that, yes we split it as she didn’t want to borrow so much). I will have around £140k cash in ISAs and then some in SIPPs. The ISAs cover the rest of the mortgage easily but they’re in equities ans bonds.

My explanation, above, is poorly written and incompressible. Sorry. (writing on phone never a good idea)

In short, and using rough numbers I will have a mortgage of £525k in 2.5 years when my ultra low rate expires.

I have/will have £140k in cash - some of which is in ISAs in cash or cash like holdings
Another chunk of equity/bond based in ISAs of about £400k
so cash + equity and bonds = the value of the mortgage - so mortgage could be paid off (as valuations of portfolio currently stands)

Then some in pensions/SIPPs/occupational pension giving me around £20k pa in 10 years at around age 55-57

i could pay off the mortgage therefore (in 2.5 years).

the danger is always that the equity/bond market collapses and the cash is no longer available + at same time mortgage rates spike at exactly the time I need to re-mortgage in 2.5 years time (think Liz Truss/ERM etc)

i think my plan is to build up cash in ISAs and have something like 25% of the mortgage value in cash
then if I can fix again in 2/5 years at I think 3-3.5% then I don't use the cash/ISA and leave it in there, let it grow as the tax free wrapper is too valuable. I think if re-mortgage rates for 2-5 years fixes are much north of 4% and look like staying at that level there may be a case to use the cash/ISA portfolio and pay down mortgage.

Any thoughts/feedback v welcome

At what mortgage rate does it make sense to use ones ISA holdings to pay down a mortgage?
 I think anything north of 4%.
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Mr GL
Posted: 04 May 2024 20:35:32(UTC)
#13

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My mortgage is shown on my regular updates on transactions thread. Have a 1% 5yr original term mortgage - theee is a thread somewhere where I discussed the process. I’ve made a lot more through the unnecessary leverage and currently have it covered via govvies yielding a lot more than the cost of financing. House is worth same as my total investment portfolio - a 6 bed house in Wandsworth has been - to date - a great investment. But it’s a family home and my kids don’t want me to sell it and seeing what it’s costing my dad to live in a care home my full home value would be needed to generate a modest income enough to cover care home costs and leave a decent lump for the kids to inherit.
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Keith Clunk
Posted: 04 May 2024 21:00:32(UTC)
#14

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Half decent interest rates have been a long time coming.

I have no debt at all. Mortgage paid off around 8 years ago and what little goes on the credit cards is auto-paid-off monthly. I use debit cards and cash mainly.

It is nice to be debt free. I've always been a bit of a tight-arse. I need to learn how to spend money.
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Keith Cobby
Posted: 04 May 2024 21:12:16(UTC)
#15

Joined: 07/03/2012(UTC)
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I have £50k left from a house extension and renovation completed before covid, this will be paid off when our current fix expires in December. Chatting about money with our son over lunch a couple of weekends ago, he said we could spend our money but he wanted the house (I thought that was nice of him!).
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SF100
Posted: 05 May 2024 13:09:51(UTC)
#16

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No debt whatsoever; property owned outright.
Childhood experiences of the late 80s live long in the memory.
Because of it, it is exhilarating to have none.

Noticed some US snippets recently on the prospect of rate increases,
rather than decreases.
That may be why it has also recently dawned on me just how many merc's & bmw's there are in Aldi's car park these days...
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Raj K
Posted: 05 May 2024 13:33:16(UTC)
#18

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Up until now my residential apartment had no mortgage however I have just applied for a 150k mortgage ( property value approx 475000) and this will be used to offset the mortgage balances on two buy to let properties I have ( HMO’s attract a much higher interest rate than single let’s 6.94% if I renew at fixed, 8,54 if I let it go on SVR). As all my income comes from my property investments I look at the total debt to market value across all of them.( rentals plus apartment) There is £890,000 of debt and the approx market value is 2,350,000 for a total LTV of around 38%.

From 2008 until now my strategy was to put extra profits into the stock market and build a pot at a faster growth rate than the interest on the mortgages. My total pot of investments and cash is now approaching £500,000. So I see my net debt as £390,000

My aim is to have a pot of investments and cash that will be greater than my debt within the next seven years.

For now that interest rates are at another level and look like this will be the new norm, I will use extra profits to pay some debt down and keep on doing that, slow and steady.

I will admit this rapid rise in interest rates has worried me a bit and it will mean much higher interest payments but it is what it is and I will survive.
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MBA MBA
Posted: 05 May 2024 14:10:08(UTC)
#17

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SF100;304789 wrote:
No debt whatsoever; property owned outright.
Childhood experiences of the late 80s live long in the memory.
Because of it, it is exhilarating to have none.

Noticed some US snippets recently on the prospect of rate increases,
rather than decreases.
That may be why it has also recently dawned on me just how many merc's & bmw's there are in Aldi's car park these days...


as an aside...cards are no longer a proxy for wealth or income, esp since the explosion of car leasing. I live next to a housing association block and 1/3 of the cars are fairly new looking Audi, BMW, Merc, even the chap who appears to work as a labourer fixing train lines has a Jag
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MBA MBA
Posted: 05 May 2024 14:14:07(UTC)
#19

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Raj K;304790 wrote:
Up until now my residential apartment had no mortgage however I have just applied for a 150k mortgage ( property value approx 475000) and this will be used to offset the mortgage balances on two buy to let properties I have ( HMO’s attract a much higher interest rate than single let’s 6.94% if I renew at fixed, 8,54 if I let it go on SVR). As all my income comes from my property investments I look at the total debt to market value across all of them.( rentals plus apartment) There is £890,000 of debt and the approx market value is 2,350,000 for a total LTV of around 38%.

From 2008 until now my strategy was to put extra profits into the stock market and build a pot at a faster growth rate than the interest on the mortgages. My total pot of investments and cash is now approaching £500,000. So I see my net debt as £390,000

My aim is to have a pot of investments and cash that will be greater than my debt within the next seven years.

For now that interest rates are at another level and look like this will be the new norm, I will use extra profits to pay some debt down and keep on doing that, slow and steady.

I will admit this rapid rise in interest rates has worried me a bit and it will mean much higher interest payments but it is what it is and I will survive.


Good points you make, thanks. one thing, however, i guess we should look at rates not over a 1-3 year cycle but what we think rates will do over a 10-20 year cycle. Over 20 years you may get 3-5 years with elevated rates but 15 years when they may well be negative in real terms...as I think they have been in the past ie negative.

To one extent who cares if rates are at 5% if inflation is 5 or more %. Only the real rate matters, right???
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MBA MBA
Posted: 05 May 2024 14:56:25(UTC)
#22

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This sums up interest rates in an article by Chris Dillow (who used to write for investors chronicle but has now disappeared)

Those of us who grew up in the 1980s and 1990s have a distorted view of what normal interest rates should be. History warns us that there is no guarantee that real interest rates must be positive, let alone high. Low real returns on cash and gilts are not so much the 'new normal' as they are the usual normal. There might be good reasons for investors to have low cash weightings, at least temporarily – but the low level of interest rates is not one of them.

and the following...

Real interest rates were generally positive in 1980s and 1990s – until financial crash of 2007.
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