Buy to Let Property Investment Income at Retirement

by Readers Question

14:12 PM, 8th October 2014
About 5 years ago

Buy to Let Property Investment Income at Retirement

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Buy to Let Property Investment Income at Retirement

** Editors Note – HIGHLY RECOMMENDED DISCUSSION THREAD **

At retirement, what is the best financial strategy to draw income, and why?  Buy to Let Property Investment Income at Retirement

  1. Continue to remortgage to release tax free equity? ( bearing in mind age restrictions by lenders and fees at each remortgage stage )
  2. Reduce overall debt by sales and paying down, in order to increase net rental income? ( bearing in mind Capital Gains Tax on sales )
  3. Any other strategies that I have not yet considered?

Many thanks

Ken Ward



Comments

Claudio Valentini

10:28 AM, 9th October 2014
About 5 years ago

Is it too simplistic to consider remortgaging the whole portfolio to maximum LTV (provided the rentals sufficiently cover this) taking the equity and still enjoying the net monthly rental cash? I don't need to know what the rentals are, but even if the net monthly rent is £100 per month, on 55 properties that's a tidy sum, plus the equity. At 70 something I'd settle for that! I don't believe there is any point being asset rich and cash poor- as an old landlady of mine once said to me when pleading poverty ( although she owned 5 properties outright) "I can't eat bricks and mortar". She was right...

ken ward

12:09 PM, 9th October 2014
About 5 years ago

Reply to the comment left by "Anon " at "09/10/2014 - 09:50":

Hi Anon
Thanks for the comment.Any such info is invaluable.
Yes, guilty as charged. Will now reflect on what you say and focus on the high rates.
Regards
Ken

ken ward

12:22 PM, 9th October 2014
About 5 years ago

Reply to the comment left by "Claudio Valentini" at "09/10/2014 - 10:28":

Hi Caudio
Thanks for the comment.
Do you mean continue to take equity, as well as net rents ?
Even at 70 years of age ?
Regards
Ken

ken ward

13:46 PM, 9th October 2014
About 5 years ago

Reply to the comment left by "Mark Alexander" at "08/10/2014 - 17:51":

Hi Mark
Many thanks, I will reflect on your comments.
We have made a donation.
I am slimming down the portfolio by selling, to a plan, the secondary props ( flats !)
It looks as though I will need to remortgage at some stage in lieu of concentrating on paying down.I will also study further your Equity Release article.
The high Cap Gains props could be remortgaged, to defer the tax, but would not be a permanent solution compared to paying them off.
Regards
Ken

Mark Alexander

13:55 PM, 9th October 2014
About 5 years ago

Reply to the comment left by "ken ward" at "09/10/2014 - 13:46":

Hi Ken

Thank you for the generous donation which is duly noted 🙂

Are you aware that CGT is not payable if you die before you sell?

It's a bummer of a way to get out of paying tax but well worth factoring into your plans, especially if you can organise 25 year mortgages just before your 75th birthday - which I believe is still possible with some lenders!
.

ken ward

14:01 PM, 9th October 2014
About 5 years ago

Reply to the comment left by "Mark Alexander" at "09/10/2014 - 13:55":

Hi Mark
You are very welcome.
Yes , I am aware of the CGT rule.
My only concern in this respect is being able to remortgage indefinitely, ie for a lifetime, to enable the tax to be avoided.
We can only live in hope !
Regards
Ken

Mark Alexander

14:08 PM, 9th October 2014
About 5 years ago

Reply to the comment left by "ken ward" at "09/10/2014 - 14:01":

If you live that long Ken, your net rental income should be massive, your properties should be worth double/treble what they are now, your LTV's should be incredibly low and the lifetime mortgage lenders will want to be your best friends 😉
.

ken ward

14:18 PM, 9th October 2014
About 5 years ago

Reply to the comment left by "Mark Alexander" at "09/10/2014 - 14:08":

Hi Mark
That is very reassuring.
You have now put a new spring into my step ! LOL
Ken

Claudio Valentini

15:10 PM, 9th October 2014
About 5 years ago

Hi Ken, I would, that is take out as much equity as possible and continue to take the rentals, albeit at a lower monthly net based upon the higher LTV when you remortgaged. As long as you have a good cash buffer in place for the inevitable rate increases, why not? As Mark suggested, outsource your management, keep your portfolio with it's LTV equity, which will continue to appreciate and have your cake and eat it! And if you have that barn conversion that you'd be happy to move into you could sell your main residence for good measure and keep the profit! No point leaving too much for the tax man. It's a simple strategy I admit, and you do have some complexity in your existing finance to unpick, however I would think that with your portfolio you could quite easily find a good ncommercial partner to help you through the complexities of refinancing and the tax implications. This forum has some good and reputable sources, and Mark has also offered his consultancy. You're in a great position, enjoy it. You can't take it with you...

Mark Alexander

18:34 PM, 9th October 2014
About 5 years ago

Just one further word of caution Ken.

As you approach the age of 75 the number of lenders available to you will reduce.

At 70% LTV you should be OK but any more than that and you could be pushing your luck.

Also bear in mind that any refinancing you do is highly unlikely to result in interest rates anywhere near as attractive as the tracker deals my former company arranged for you. This is going to feel like quite a hit on your monthly cashflow. Therefore, do what Anon has suggested and focus on paying down your most expensive mortgages first (if any) in order to improve your cashflow and hence your liquidity reserves in the meantime.

I also agree with Claudio, "you can't take it with you so enjoy it whilst you can!"
.

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