Pay off entire mortgage investment property

M

moneymakeover

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Just wondering if anyone here paid off their investment property loan entirely?

I have 80k outstanding and I'm looking forward to when it's all paid off and then I won't have the monthly 1,800 repayment.

Up to now I have been breaking even in terms of cash flow

I'm interested to hear from anyone who has paid down the investment mortgage loan and now owns the property free and clear.
And if it made a big difference to your life

I understand a large chunk will go on tax especially when there is no mortgage interest to offset against the tax bill.
 
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moneymakeover said:
I understand a large chunk will go on tax especially when there is no mortgage interest to offset against the tax bill.
Click to expand...

Not sure where you get this understanding from. With 80k outstanding, you might be paying around 5k per annum interest at present. So once the loan is paid off your tax bill is unlikely to be increased by any more than 250 per month. Hardly a large chunk of the 1800 you'll no longer be paying?
 
You should probably do a moneymakeover.

If you have a mortgage on your family home, it might make more sense to pay that off first if the rate is higher than than the Investment property rate after tax.

If your home loan is paid off and the after tax interest rate is low, then you might be better off maxing your pension contributions.
 
Yes people I understand all that. Yes interest about 3000 per year. Saving 1500 in tax. Sorry if your definition of large chunk is different to mine

I would "reply" @Brendan Burgess but that button is missing for me??

I pay 1800 monthly towards the mortgage. Which is an overpayment. I have increased to 2,000 to try to pay off loan inside 3.5 years.
Otherwise the mortgage would be about 1,600

As for my home loan that's got 20k remaining and I only pay about 200 per month. I feel happy I can get to end of the investment mortgage within 4 years. Plus the bank expects that payment.

Folks I appreciate your interest but you're not answering my question
 
Oh ye nitpickers
What I said was "a large chunk will go on tax"

So when I have 24k in rental income and almost zero offsets, insurance, repairs, management charge. I might have a tax liability of 8k
That's a large chunk @llgon ?
 
I've paid off 4 investment mortgages, one remains (36k)

I provide for tax, management fees and maintenance.

I channel the balance into topping up my AVCs and my wife's AVCs.

Once I have maxed these out I put money into equities (berkshire and SP500)
 
I did. Never had a big mortgage on it but the interest rate was higher than my PPR (at the time it was over 4.5 v. 1 per cent.) As it was a small mortgage, the interest was never huge but we had money and we decided to get rid of the mortgage. The income become part of our monthly income instead of having a monthly liability. It means we are more confortable and have no issue taking other financial decisions.
 
That's fantastic @Persia
Do you put aside money monthly for tax etc?
Do you find you're paying approx 33% on tax? And you pay preliminary tax?
I think when the mortgage is paid off my main expense will be tax.

Do you still keep the day job?
 
Every month I set a portion to cover tax, it goes to another account, out of sight out of mind.

Prelim is a major pain, once you pay it once it just rolls over. It's a big hit in the first year you pay it in full.

Not sure of rate I pay would need to check last few years but have been updating bathrooms in a few apts (write off over 8 years).

I am still employed but out due to a significant but non life threatening health issue.
 
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moneymakeover said:
80k outstanding .... monthly 1,800 repayment
Click to expand...
What interest rate are you paying & how many years left?

In any event, the answer is relatively simple, you are always better to clear debt. Credit cards, personal loans & then your PPR. After that you start investing.

Dave Ramsey's 'baby steps' are worth reading up on though I can live without the religious angle.
 
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