[tinydancer09Member@tinydancer09Join Date: 2009Post Count: 3]

May 28, 2009 - 6:45 am

Thanks, now I understand that there is a difference between yield and profit.

I have two more queries:

1.What would you consider a good yield?

And

2. If the property cost 104k, is now valued at 90k, has outstanding mortgage of 60k (borrowed at 4.9%), with gross rental income of 2380 p/a.  Should I use capital earning interest at 0.5% to pay off mortgage, or continue to borrow at 4.9%?

Which makes better financial sense? Is it just simple Math; ie. its cheaper for me to spend than it is to save??

Thanks again

I know the figures don't look good, but times are hard in the UK.

[tinydancer09Member@tinydancer09Join Date: 2009Post Count: 3]

May 28, 2009 - 5:31 am

Still confused…

If it costs to borrow, surely that would affect your profit?? Any income you make would go on repayments. Surely the higher the cost of borrowing, the less you make…

Thanks for your reply.