How to pay off capital on 20yr interest only mortgage?

[maggiethecat]

We have a buy to let (flat that we used to live in) and although we think that eventually it will be a nice little earner I like the idea of paying off the capital at the end of the term (or sooner) and giving it to our girls eventually (who are still quite young) rather than having to sell it.

Any ideas about investing to pay off capital?

weare paying off our second property by making overpayments on the mortgage. The monthly interest only payment is £450ish we are allowed to pay 20% extra each month which is £540. The rental income is £1100 a month the extra £560 we put into a savings account. When the discounted rate finishes (we only tie ourselves in for 2yrs) We use this to pay a lump sum off the mortgage

hope that makes sense

That makes sense. We are in a good position at the moment in that our fixed mortgage expired end last year and we are now on C&G's svr which is not much above base rate. So we are in good position of having surplus. While it lasts we will be saving some but I wonder if we should be investing in an investment isa or something so that we can hope to pay off capital at end of term. We did not take out any investment vehicles for this property as initially we thought that we could sell at the end of term and realise any profits through increased equity but I quite like the idea of giving property to the girls.

You could phone them and ask how much it would cost you each month to change you mortgage to a repayment one. Not as exciting as investing to pay it off but at least with actually paying it off you don?t have o worry about whether or not your investment will fail or not.

They might charge you to switch over or you could just keep making overpayments. Plus if you go onto repayment you will owe them less each month and more of your money each month will be going to pay off the capital.

Thanks Bonnie - shudder to think what monthly payments would be but at least debt would be paid off in the end.

over pay of your residential mortgage first with any surpluses as your btl interest is offsetable against tax reducing your overall tax bill, which you cant do with yor residential mortgage then once your home mortage is paid off, start paying off the buy to let.