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New Investor with £120,000 needs help & guidance

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I am a 44-year-old British male with £120,000 in savings, looking to invest into the property market with a view to retiring at 55 living off my property portfolio.

My situation is that I have been advised by my mortgage advisor that I am not eligible for a residential/BTL mortgage "as yet" as I have not been living back in the UK long enough (just returned after nine years working abroad). The mortgage advisor told me to purchase for cash and then remortgage after six months as I will then be seen as an 'experienced landlord' in the mortgages companies eyes.

I currently live in London (renting) and understand it will be difficult for me to generate any investments in the London area, so I am focusing on my home town of Stoke-on-Trent, focusing on properties between £50,000 - £70,000, with a view to rent out for a return of £5000 to £6000 per annum, or generating between 8% - 10% yield.

I have just purchased for cash my first property for £68,000 (was advertised at £75k) which is a 3 bedroom terraced house in Stoke-on-Trent that will bring a rental return of £6000 per annum.

My ideal situation in 10 years would be that I would have between 6/10 properties all being rented out for around £6000 each per annum.

The questions I keep asking myself are:

How can I achieve this within the 10 year time frame with £120,000?

I understand that the properties in Stoke do not gain capital appreciation as they do in London and the south-east of England etc, so would I go for a typical capital repayment mortgage, or an interest only mortgage, or a mix of the both throughout the 10 year period?

I have received mixed messages with reference to tax on the income and what is claimable, or not. For example, I've been told that the tax is measured on the rental income, not on the net income.

I am currently searching the Internet and auctions for cheap properties that fit my target yield and 10 year objectives, but I keep asking myself whether my art objectives are achievable with the investment I have and my proposed strategy.

Right now I am not looking to live off my investment as I can carry on working for the next 10 years. That said, if there was a way of living off my investment "straightaway" and also being able to live off the investment after 10 years, I would seriously consider this.

I'm sure my situation is very similar to other people you on this forum and I would welcome any advice on my situation.

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  • 2 months later...

Hi steve, there is no simple answer to your question however i can tell you that the tax is based on net income and not gross income. That means you can subtract mortgage interest payments, letting agent fees etc before you pay tax.


Maybe this will help you, I just found it on google a minute ago.




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