Owning your own home

Where are the two properties? If they're in different parts of the country then keeping two may be more of a hedge against property price fluctuations.

I assume you've considered the CGT implications of selling the rental property. It may be worth "living" there for a while before selling it.

My crystal ball says not a lot, well I'm massively speculating but it goes as follows. (I'm kinda in the same boat with my mortgage up next august so hoping it works out. I did look into paying my ERC and shifting my mortgage to a better rate a few months back but didn't work out financially viable.)

• Base rate raised to 0.5% at least, this is based on (very) recent growth, the way things are going with Brexit, inflation will happen based on the pound weakening, therefore imports increasing in price, Oil has just broken $60 for the first time in 2 years so fuel and heating will increase in price. This makes the housing market a bit more unstable meaning less house buying/moving, meaning less people seeking out mortgages making the industry have to work harder for customers so hopefully a more competitive market.
  
  

I could be horribly wrong in my speculation but I'm expecting the best rates to be around 0.25% higher this time next year.

I have no qualifications, I am not an expert, please seek qualified financial advice, also I would set up a spread sheet to play out the different scenario's.

I've used this one in the past.
http://www.locostfireblade.co.uk/spreadsheet/Index.html

You should hopefully be able to work out what kind of a move in interest rate would make moving your mortgage now rather than waiting it out.

Where are the two properties? If they're in different parts of the country then keeping two may be more of a hedge against property price fluctuations.

Both London, so that's out.

In fact the primary driver for shifting it is that too much of our money is in UK (London) property.

I assume you've considered the CGT implications of selling the rental property. It may be worth "living" there for a while before selling it.

Pffffft all the gains have been during the period I haven't lived there, and living there for a bit doesn't change that. CGT is smarter than that, as I understand it. And honestly I cannot be bothered. I can save £2k by transfering 50% to Mrs Howard tho.

why are you looking to bin the btl flat off? if it washes its face, and you get a small yield off it - why not keep it? the entrance and exit costs in the London market are pretty big, you are in the market now, you'll have to wear the tax changes but if someone else is paying off the mortgage then its still a pretty nice way to build up a nest egg for retirement.

it washes its face

No.

Just no.

https://www.lfgss.com/comments/13561497/

why are you looking to bin the btl flat off? if it washes its face, and you get a small yield off it - why not keep it? the entrance and exit costs in the London market are pretty big, you are in the market now, you'll have to wear the tax changes but if someone else is paying off the mortgage then its still a pretty nice way to build up a nest egg for retirement.

I agree with most of this, but

• It's a leasehold ground floor flat. So I own two stupid leasehold flats. If I could click my fingers and make it a house or share of freehold I would, but I can't.

• it's now stupidly expensive to move in london if you own a second property

• The yield is OK, nothing to write home about, and even less so after the tax changes kick in. If the boiler went...gah.

• paying the mortgage off is fine but without capital growth - and I don't think there will be much going forward in the medium term - the figures don't stack up compared to carefully invested Pension.

• I've let it out for nearly ten years now. I'm kinda done with it.

Thanks, that’s very helpful.

The sums work if we didn’t stay with Nationwide, if we did then we’d be a few hundred quid down, but having fixed in a rate now. If we moved lender then we’d be up regardless (because Nationwide allow moving to a new mortgage 3 months early without penalty).

Rules seem to have changed since I last looked at it, they now give you the last 18 months by default (probably to stop people doing just that).

Although it doesn't matter when the gains arise, it's a straight pro-rata between purchase and sale price and time you have/haven't had it as PPR.

http://www.rightmove.co.uk/property-for-sale/fullscreen/image-gallery.html?propertyId=69567890&photoIndex=0

Do surveys ever pick up pipes and stuff that may run under a house? Reason i ask is on this particular property you have nunhead res there and we are talking big pipes (i havent checked what sizes) but out of curiosity just wondered?

Fair enough, our situation is slightly different, as our circumstances have changed since buying our property (wife left her profession and has struggled to get anything else) we have to stay with our current lender so the rates aren't the best. Looks like you're in a good position and have considered most scenario's. I think you can't go too far wrong with whatever you choose to do, no-one has an appetite to move markets aggressively so if a bit of time passes I expect you wouldn't lose out big time if and when rates change.

Sounds like you have a good grasp of your situation tho, looks like you'll be grand, best of luck.

How much is the BTL flat worth?

Would selling it off let you pay off your mortgage or pretty much? I think that's what I'd be aiming for.

I agree that the flaw in your current plan is too much exposure against your own home. If you think this:

what will probably be the lumpiest ride this nation will experience in peace time

Why expose your own place so much?

also

wear the tax changes

sorry @princeperch

I thought that if you were replacing your main home then you didn't pay the additional rate of stamp duty, even if you own two properties both before and after the sale and purchase transactions.

Yep that's correct.

As I understand it, you need a specific survey to map pipes. Our next door neighbor is selling up and their enormous garden has attracted the interest of lots of small scale developers. One paid to have a survey done to map the sewers and culvert that run through the garden.

This is a pain... we found it out when we were building an extension and trying to find out where pipes were. First thing we found out is that there are plans as to where pipes should be, but strong emphasis on should!
In the end we paid for a company to come out and use CCTV to map them. Cost me something like £500 to find one small drainage pipe.

How much is the BTL flat worth?

Enough. But curiously about £70k less than the current lender thinks. I know this because I tried to sell it, and of the thirty people who went through the door, two of them offered about the same amount which is a lot less than everyone expected.

Would selling it off let you pay off your mortgage or pretty much? I think that's what I'd be aiming for.

It's what I was aiming for when I tried to shift it this summer. Whole load of factors - grumpy tenants (rightfully), naff estate agent, crap market - all scuppered that plan and has left me paying about £500 a month more on the BTL mortgage than I could be paying.

I agree that the flaw in your current plan is too much exposure against your own home. If you think this:

what will probably be the lumpiest ride this nation will experience in peace time

Why expose your own place so much?

I could re-mortgage the BTL flat with another BTL mortage. It will cost me about £1500 in fees and then for a five year fixed I'd pay 1% more over those five years. It looks expensive. I'd then piss the lender off when I transfer 50% of it to Mrs Howard. I'd then pay ERCs when I sell it. Yes I could get a two year fixed or a three year but ideally I want a six month fixed and nobody will sell me that :)

So that's the why. Cost. What's the downside? We are effectively resetting our residential mortgage back to where it was when we started here eight years ago. Technically we have enough cash and liquidish stuff that was could pay the monthly payments for three years even if neither of us worked.

So I don't see it being that risky. What am I missing?

Endoscopes cost about a tenner these days...

It's a muddle, yes, but that's the case.

Doesn't change that much, I still want shot of the BTL.

Couldn't agree more. Don't think London resi makes sense as a short or long term investment at current valuations.

I’m looking for some pointers on something which is probably very simple and blindingly obvious, but I’m economically illiterate.
I’m 1 year into the fixed-for-5-years bit of my 25 year mortgage. So in 4 years things like interest rates will have changed... during this 4 year period does it make sense to pay off as much
of the mortgage as possible?
If it makes no real sense then I won’t because it’ll really squeeze us financially to do this, but if it sets us up for an easier and more secure transition once the fixed period ends then it’s something I feel I should make the sacrifice for.
Any thoughts from anyone who understands this shit?

For as long as you have a mortgage, paying it off is usually the best use of your cash. You are comparing a guaranteed 3% return (or whatever your rate is) with an uncertain equity or market return.

In 4 years time you will be looking to get a new deal, either from your existing mortgage provider or a competitor. Even without the confusion and uncertainty of brexhit, you will be competing for funds with many others. Do you want to be 'the guy' who just paid the minimum each month, or do you want to be 'The Guy' who has increased the equity in the property by paying off some of the principal each month for 4+ years?

does it make sense to pay off as much of the mortgage as possible?

Yes. The sooner you can dump a pile of cash into it, the less interest you pay over the life of it.