ASK363: Should I pay down my mortgage? PLUS: What questions should I ask about this deal?

Considering the current mortgage rates being higher than savings rates, some investors might be considering using their savings to pay off a lump sum when their residential mortgage is up for renewal, with the plan to withdraw it again in the future for property investments. However, as discussed in the podcast, the key risk in this strategy lies in the uncertainty of being able to access the funds again in the future due to potential lender criteria changes or personal circumstances. A more ideal solution suggested is getting an offset mortgage, which allows savings to be offset against the mortgage balance, effectively reducing the amount of interest paid and providing easier access to funds for investments.

Offset mortgages, which allow you to link a savings account to your mortgage and reduce your balance based on the savings, are less common now, especially for buy-to-lets. If you have an offset mortgage on your own home, it can effectively give you a higher return on your savings than a traditional savings account. However, there's a risk that you might pay down your mortgage too much and not be able to extend it to access cash during a market downturn. In such a scenario, it might be better to stay in cash and bear the cost, or take on the risk of not having enough borrowing capacity during a potential property market crash. Ultimately, the decision depends on your personal risk tolerance and financial goals. If you can't get an offset mortgage, consider speaking to a broker for alternative options.

When considering an off-plan purchase for an apartment as a holiday let, it's crucial to conduct thorough research beyond just the numbers. While the numbers are important, focusing on the developer's track record and financial stability is equally significant. Not all developers complete their projects, and it's essential to ensure that the one you're dealing with has a solid history and is financially sound. Additionally, be prepared to put down a deposit, typically 10%, in advance of the completion of the project. By doing your due diligence on both the numbers and the developer, you'll be in a better position to make an informed decision about your off-plan investment. Remember, the key to successful property investing is research and preparation.

When investing in off-plan properties, it's crucial to put down a small deposit, ideally no more than 10%. This strategy allows you to control 100% of the assets while only risking a small portion of your capital. During the off-plan period, any increase in property value can result in significant returns on investment. However, having a small deposit also reduces risk and makes it easier to protect your deposit. It's essential to ensure that your deposit is protected, preferably through an independent solicitor. Avoid using a solicitor provided by the seller, as they may have conflicts of interest. Your solicitor should verify that your deposit is securely held, either in escrow or backed by insurance from the property's warranty provider. Off-plan property investment can be highly rewarding, but it also comes with risks. By following these steps and doing thorough research, you'll be able to make informed decisions and mitigate potential issues.

Even when things don't go as planned, it's important to do thorough research. This was emphasized during a recent episode of Ask Robin Rob, where two listeners' questions were answered. The first question involved a property investment that was initially off-plan but turned out to be a profitable opportunity after careful research. The second question concerned a potential business opportunity, which also required extensive research before making a decision. The hosts emphasized the importance of not being put off by initial setbacks or deviations from the plan. Instead, they encouraged listeners to delve deeper and gather as much information as possible before making any moves. This approach can lead to unexpected opportunities and valuable insights. In essence, the takeaway is to remain flexible and open-minded, while also being diligent and thorough in your research. This mindset can help you navigate the twists and turns of any situation, and ultimately lead to successful outcomes. So, whether you're considering a property investment, starting a business, or tackling any other project, remember to do your homework and stay focused on your goals. As always, we'll be back next week with more insights and advice on Ask Robin Rob. And don't forget to join us on Thursday for the property podcast. Have a great week ahead!