Releasing equity from my home to start a BTL portfolio

Hi Lucia

Forgive me for saying so but your proposed strategy appears illogical and counter-intuitive to me.

Why would you spend the next five years paying off your mortgage, only to replace it with another new mortgage, in order to start a BTL portfolio?

Why not just start now?
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Reply to the comment left by “Mark Alexander” at “23/11/2014 – 10:06“:

Hi Mark, assuming then that the mortgage was already paid off, what would you advise then? Thanks.

Reply to the comment left by “Tilly Mint” at “23/11/2014 – 10:42“:

Hi Tilly Mint

I don’t like to give advice in isolation of all the facts. See the related article linked below which I have just commented on.
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I was in a similar position of close within a few years of paying of my main residence in full as we was on a 5% plus mortgage deal. We decided to remortgage our property onto a better deal of around 2% which made no sense then to pay it off as the savings would be much less than the gain from buy to lets. As a result of the low rate we could re borrow 6mths after initial re mortgage at the same low rate up 65% so we did and acquired two further properties, which will pay me back more than interest saved on paying off current.

So as he rightly said seems to not make sense if you can pay it off to then re borrow same money with interest? Unless you have a high rate which you can changed. We also due to the fact my income was high enough to pay off a mortgage was to utilise this while things are good to buy another two properties without financing the deposit side of things.

So I would save spare income, start buy to lets now and remortgage main only if high rate, subject to all your finer detail which we don’t have.

Hi Mark and Martin,

I can see why you say the strategy is illogical. Hopefully, further information may help explain my rational. I have actually acquired this property through the right to buy scheme as I live with tenant (and as the child of the tenant, have always lived at the property). However, there is a requirement to pay back part of the discount if a transaction occurs at the property within the first five years. This is why I am unable to remortgage now. I am paying off the mortgage and all other household costs, and am happ?y living at the property. I love the property and my area so will continue to live here for the foreseeable future and even if I move the (former) tenant will remain at the property. However, it seems like the sensible approach is to release equity from the property at some point (at least “sensible” from my perspective). Please let me know if you still think this strategy is illogical and/or believe there is a better way to approach this.

Thanks,

Reply to the comment left by “Lucia – Budding Property Investor ” at “23/11/2014 – 19:20“:

I still can’t see why you need to pay off the mortgage in five years or why you can’t borrow against the security of the property.
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I suppose I don’t need to pay off the mortgage and I can borrow against the security of the property. What would be your suggestion on the best way to proceed, if you were in my position? I would be grateful for your advice.

Reply to the comment left by “Lucia – Budding Property Investor ” at “23/11/2014 – 20:59“:

My advice is speak to a good broker, see >>> https://www.property118.com/member/?id=314
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Mark is right . Madness to pay it off only to borrow against it again in 5 years. That would be counter productive. Mine is on interest only and I`ve borrowed against it 3 times over the years at intervals to put down deposits to buy more. The gained cash flow from them easily outstrips the increased mortgage costs. Its also all offsetable against tax

Do it today and also benefit from the increased capital growth on the newly acquired properties over that 5 years
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