Pay off mortgage or buy 2nd property

W

wyser2

Guest
Hello Everyone,

I was hoping that I may be able to get some suggestions from you for my future financial planning. I have a house currently worth 300k,with an outstanding mortgage of 50k. With my SSIA and other savings that I will have at the end of the year,I would be in a position to clear my mortgage off.
Recently,however I have been thinking about buying an investment property and I was wondering what should I do?
1.Should I wait and buy at the end of the year and clear off my existing mortgage?
2.Should I use some of my savings towards a second mortgage and continue with my existing mortgage of 50k?
3.Should I buy a second property at all?

The reason I have been thinking about buying a second property is that my salary is increasing and as I am currently 27 I would like to be able to invest my finances for some security in the future. Unfortunately, I do not have enough expertise about stocks and shares to invest there in the near future. I would really appreciate any suggestions that you amy have.

Many thanks.
 
To be honest I would pay off your current mortgage, as small as it is, just to get piece of mind and save a few bob. Bear in mind that according to some articles (this one is from 2004 but still relevant) the rate of return on property investments is lowering to around 3%/4% which a lot of investors will tell you is the time you need to think about getting out.

However, if you're thinking of long term, and are still willing to invest in property I would still suggest that you pay off your current mortgage and try and raise the deposit needed for the second property if you can.
 
Even if it was a case of reinvesting your SSIA money how/why have you concluded that domestic property is the most appropriate investment option for your specific circumstances compared to other alternative options out there? And do you want to be a landlord?
 
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