I purchase my 1st BTL property in 2010, paid £46,000 deposit from savings and took out £77,000 BLT mortgage. Mortgage over 25 years
My aim is for the rent to pay the monthly interest payment and the extra income after that saved up to eventually pay off the capital.
Basically in short I don’t want to put any more of my savings in to the property and want the tenant rent over the 25 years to pay off the entire mortgage so the property is mortgage free and mine outright – is this possible?
To achieve this I am doing the below and this is where I would like advice, if is the correct way, suggestion etc:-
Rent - 550
Interest mortgage - 370
Profit monthly aprox - 180
Term – 25 years
Over the last 3 years the mortgage has been on interest only and I have build up cash reserve of £3000. This money I intend to keep as it is for voids, maintenance etc.
Now my main thing is how I pay the capital:-
Option 1) Once cash reserve of say £5000 is build up, then the rest I use to make capital payment adhoc maybe 6 monthly/ yearly to reduce the mortgage and thus the interest only payment?
What do people think is this the best way to manage the mortgage so it eventually gets paid off? I understand mortgage payments may fluctuate depending on interest rate and product I’m on through the mortgage term?
Or is there another way to approach this?
Is paying off capital making the property profitable, hence have higher tax bill?