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  1. #1

    purchasing second property

    Hi i'm new to the property field, I own my flat outright but I now would like to buy another property to rent out, is a interest only mortgage the best option?
    Am i best to save for a deposit and get a mortgage for the new property or borrow against my own?

    Thanks in advance

  2. #2
    I think the answer to both of your questions really depends on you. I know investors to take comfort in having a repayment mortgage because they feel they are paying off the debt. Personally, I prefer interest only and I use the spare cash flow to maintain my properties and reinvest when I can get a chunk saved up!

    Same goes for your second question. If you're comfortable borrowing against your own home to buy another then the potential benefit could mean that you profit on the money borrowed. In my experience, I actually did both. I saved and borrowed at the same time. By the time I had enough saved, my home had risen enough to allow me to release enough to borrow another deposit.
    This allowed me to scale from 1 property to 3 and 3 soon turned into 6. As the market has cooled a bit and I start to look at my leverage, I have decided to stop borrowing and continue saving. But scaling my portfolio at the rate that I did now allows me to accelerate my savings as my cash flow is so much better than before

  3. #3
    There is no right or wrong answer, so it all comes down to your attitude to risk.

    When things are going well, everyone says leverage yourself up to the hilt and allow inflation to reduce the real value of the mortgage debt you have. When things go badly, a lot of those people go bankrupt.

    I work with investors who specifically want a mortgage free property for themselves, and then work on getting a portfolio separately. In my personal opinion, your home isn't something to be risked - but each to their own. I know loads of people who have refinanced their own property and it's worked out really well for them.


    All entirely useless advice so far. But if it was me, I'd be saving for a property and then use finance to purchase your first investment property. I then opt for an interest only mortgage, but I overpay the mortgage so I'd be free and clear of any mortgage within 10-12 years.

    At a push, I might be tempted to release a maximum of 50% of my own property... but I'd be reluctant to.


    It really does all come down to what you want. Do you need the cash in the short term? Do you want assets in the long term? Do you want to replace your income in the medium term?

    Happy to have a chat if you think it'd help.

  4. #4
    I think the answer to both of your questions really depends on you. I prefer interest only and I use the spare cash flow to maintain my properties and reinvest when I can get a chunk saved up!

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