Pay money off mortgage?

[CKT]

I was reading the posts about having an interest only mortgage on investment properties and I am seeking some advice,

A friend and myself have bought a house as investment for 110K, because we didn’t qualify for the whole amount we had to get 2 mortgages, 99K interest only and 25K principle and interest (25K was secured on my home)

We borrowed the extra to decorate the house for resale in the future and to cover non-rental periods, the house is currently being rented out, and we are clearing just 8 euro a month including all insurances.

We have just found out that the council are planning to knock the house down to widen a road in the next year.

I was going to pay the extra we borrowed off the 25K to reduce our monthly from 140-100.

Would you recommend this?

 

[ClubMan]

We have just found out that the council are planning to knock the house down to widen a road in the next year.

If the council are knocking the house down then surely it's subject to a CPO or something? Have you got a solicitor on the case to represent you in this matter?

We borrowed the extra to decorate the house for resale in the future and to cover non-rental periods, the house is currently being rented out, and we are clearing just 8 euro a month including all insurances.

What insurances? If you are including mortgage protection life assurance then you should know that this is not mandatory for non owner occupier mortgages so perhaps you should not be paying it. If the difference between rental income and outgoings is so tight then perhaps the investment is not viable and you would be better of selling

I was going to pay the extra we borrowed off the 25K to reduce our monthly from 140-100.

Would you recommend this?

Hard to tell. The other two considerations above would seem to be much more pressing in my opinion.

 

[CKT]

Thanks for advise.....

In regards to CPO, yes we have got advise from solicitor but the council has not contacted us about this yet. I made enquires myself and they told me that they would build us another house or else carry out a CPO, our solicitor said the latter is probably the more realistic option.

We are paying life assurance for my friend, my wife and myself on the 99K and on the 25K, and house insurance. Was told it was mandatory by agent…..

The reason I’m thinking of paying money off 25K is to get the extra monthly while we can

 

[ClubMan]

In regards to CPO, yes we have got advise from solicitor but the council has not contacted us about this yet. I made enquires myself and they told me that they would build us another house or else carry out a CPO, our solicitor said the latter is probably the more realistic option.

Would it not be better to wait until this pans out before lumping money into the mortgage?

We are paying life assurance for my friend, my wife and myself on the 99K and on the 25K, and house insurance. Was told it was mandatory by agent…..

Well that is not strictly correct. Mortgage protection life assurance is only mandatory (with minor exceptions) for owner occupied PPRs and not for investment properties although some lenders may insist on it.

The reason I’m thinking of paying money off 25K is to get the extra monthly while we can

I still don't understand. You would be "losing" €25K by paying it off the mortgage and losing the ability to offset interest on that amount against rental income just for the sake of making the monthly returns look better? Am I missing something here?

 

[CKT]

I heard what you are saying, new to this game, thanks vmuch for advise!