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Cas Zawe made a sharp investment in property back in 2022, when he bought an abandoned three-bedroom house in Durham outright for £66,000. He spent £9,000 on renovations to bring the property up to scratch so he could rent it out.
Today, it’s worth £100,000.
Mr Zawe, from Leighton Buzzard, Bedfordshire, said: “I’ve thought about investing in stocks many times, but I’m scared of the risks – I thought property was safer.
“It took me a long time to buy a property. I only had the confidence from reading books and [Telegraph] articles.”
The property generates a healthy rent of £530 a month – a vital addition to the 52-year-old’s £26,000 salary. It may also prove a lifeline in the future, given his pension is valued at just £35,000.
Mr Zawe, however, still has a £100,000 mortgage on his own home, which eats away at his slim pay packet.
It is his biggest expense, costing him around £1,000 a month. He’s locked in at a fixed rate, paying 4.7pc interest on the mortgage.
“I need to clear this mortgage,” he said.
After all expenses, Mr Zawe is left with just £740 a month. He doesn’t have any investments and has £27,000 in his savings pot in an account that pays little interest.
Mr Zawe came to the UK from Zimbabwe in 1999 and worked as a transport clerk until Covid, when he noticed that HGV drivers’ salaries were increasing, so he switched jobs.
Since then, Mr Zawe has tried to save at least £500 a month to provide a safety buffer.
He now works 40 hours a week delivering packages for businesses, but wants to know how he can afford to cut down his hours as he gets older.
“I’m not spending over-zealously, and both of my children are now working, so I no longer have any dependents.”
Still, he’d like to help his 22-year-old son buy a home in the coming years, too.
With so much to consider, there’s one key question on his mind: should he sell up in order to pay off the debt?
Emily Brear, independent financial adviser
Mr Zawe is doing lots of things right. He owns two properties, has no credit card debt and has built up savings. However, his money is not working as hard as it could – his pension is relatively small for his age and his day-to-day cash flow is tight.
As Mr Zawe has a mortgage rate of 4.7pc, it is tempting to consider pouring every spare pound into reducing the balance. However, using all £27,000 of savings to reduce the mortgage would leave him financially exposed.
As a lorry driver in a physically demanding job, access to liquid cash is important for the unknown costs, such as an inability to work from illness or injury.
A more manageable approach would be targeted overpayments, rather than trying to pay off the mortgage in one go. By setting aside an emergency buffer, typically three to six months’ expenditure, Mr Zawe can make lump-sum overpayments when his fixed deal allows penalty-free reductions.