[Spotlight] Is Property Still Worth It? The Honest Truth for Dentists?

Should you prioritise paying off your mortgage or building your pension pot? It's one of the biggest financial questions a dentist in their 40s will face — and the answer might surprise you.

In this spotlight episode of Just4Dentists, Dr Ruth Baidoo shares a key moment from the property special with mortgage broker Andrew Brown (Mortgages4Dentists) and financial advisor Martin Febery (Money4Dentists).

In this clip they cover:

• Martin's case for why paying off your mortgage early might not actually be the smartest financial move — and what he would do instead
• The interest only mortgage debate — when it can work brilliantly for disciplined high earners and when it can become a serious problem
• The real story behind one of the biggest financial mis-selling scandals in UK history and what it means for dentists considering their options today
• Why attitude to risk is ultimately the most important factor in any mortgage or pension decision

Listen to the full property special on the Just4Dentists feed for the complete conversation including buy to let strategy, leveraging, first time buying and the professional mortgage range for newly qualified dentists.

Have a question, or want expert insight?
 📩 Email info@j4d.co.uk

💬 Join the Just4Dentists Facebook community to keep the conversation going: https://www.facebook.com/groups/just4dentists/

Presented by Dr Ruth Baidoo

Produced by Your Podcast Producer for the Just4Dentists team 

Additional Information:

Dr Ruth Baidoo: https://dr-ruth-dentist.com/

Just4Dentists: https://j4d.co.uk/

Money4Dentists: https://money4dentists.com/

Disclaimer: The information provided in this podcast is for educational and informational purposes only and does not constitute formal financial or legal advice. Every dentist’s career pathway and financial situation is unique; therefore, you should not rely on this content as a substitute for professional advice tailored to your specific circumstances. The value of investments can go down as well as up, and past performance is not a reliable indicator of future results.

Transcript

Dr Ruth Baidoo 0:00

Hi, I'm Dr. Ruth Baidoo and welcome to Just 4Dentists. Every fortnight I spotlight a moment from one of my recent conversations that really stayed with me. In our recent episode, I was joined by Andrew Brown and Martin Febery to flip the script and focus entirely on property strategy, a topic that almost every dentist considers at some point in their career. Here's a moment from that conversation that gives you a real sense of how to build a portfolio that supports your life rather than draining it.

Episode Spotlight

Dr Ruth Baidoo 0:25

For a dentist who's maybe, you know, let's just say scenario-wise, dentist in their 40s, who's maybe been doing dentistry for a little while now, should the priority be clearing the home mortgage or maximising the pension pot in this situation, this scenario?

Martin Febery 0:39

This one is a big philosophical debate, I'd say. Debt-free versus tax efficient. Um, the number one thing to think of is where you stand on risk. So penny off the mortgage gives you a guaranteed return, effectively, the interest you're saving. So it could be, you know, four at the moment, it could be four to five percent, hopefully a bit less over a bit of time. So that's pretty good. Guaranteed return. And it makes you feel good because your house has paid off. And again, we're a we're a nation of homeowners, so we kind of like that cuddly feeling, especially if you're slowing down work or moving to part-time. But a pension, so it's much more attractive when you start to look at the actual maths, forget the emotion part of it. Something like 40 odd years old, as you're saying, you're earning over the higher rate threshold. Every pound that you put into your pension costs you only 60 or 55p once you factor in tax relief. Then it grows tax-free in an environment that you can access from 55 at the moment but soon to move to 57. So you really have to think about what's your objective. Do you want security now or growth later? Uh, you plan to sell your practice at 55 and retire early? Do you have a healthy pension pot? Are you catching up? All those kinds of things. Most cases, a blended approach works really well with that. But if you're like me, I even go one step further, and this is an extreme, but work with me. Why would I give my perfectly good money to a bank that doesn't want it? So personally, I'd switch to partially or totally interest only and let inflation do its work on the outstanding capital and um put the capital I would have paid into the pension, sorry, that would have paid off the mortgage into a pension or another tax efficient vehicle if you tapered. And then just let it grow through a pension rather than paying off the capital. You would expect to get a greater return on your pension, especially including the tax relief, than you would paying interest. But that is a higher risk strategy. So what we really want ideally would be kind of a hybrid between the two. I don't have trouble sleeping at night because um I'm a finance person. If mortgages keep you awake at night, then it's probably good for you to pay them off as quickly as you can. If it's not something that gives you a can concern, then certainly don't pay off extra. Use the money wisely and maybe even move to interest only if you've got that risk appetite. Andy, feel free to disagree with that.

Andrew Brown 3:08

Yeah, I mean, this look let's be really clear. This is a really hot area for the regulators. And our parents and 20 years ago, almost everybody had an interest-only mortgage, and then they had an investment which is called an endowment, which the idea was you'd invest into that every month and it would grow, it would pay off your mortgage and give you a nest egg. Now, the problem is it doesn't always do that. It can be less than you're anticipating the investment returns. You can get to the end of your mortgage, ready to retire, age 68 or maybe even 65 was promised back then. And your endowment's not going to pay your mortgage off. Oh, I can't retire. And that that caused one of the greatest mis-selling complaint investigations that we've ever had in Britain in financial services. And sadly, from an advisor perspective, some advisors would be given really good advice, but it wasn't always very well documented, and it was hard to prove that someone did really understand an endowment and that there could be a shortfall. And it it almost got to the point where almost every complaint was being upheld, and therefore customers were being put in a position as if they'd had a repayment mortgage. So if you can imagine that how much that costs to rectify, we're talking billions of pounds. The market swung almost entirely the other way now. Most people have a capital repayment mortgage. And I think Martin makes a good point that for some people, it might be appropriate to have an interest-only mortgage, but there's a lot of risk there. And we we have to be really careful. And by the way, I meet people regularly that are 65 with a big interest-only mortgage that haven't got a repayment strategy and they're in a mess. It's a real, real problem. And we cannot risk that. So the consumers are going to have to be reasonably sophisticated, I'd say high earners, disciplined. If you're going to have a strategy where we're going to put money into an ISA, for instance, or it could be a pension, pension locks it in, which I quite like. You can't touch that until Martin mentioned until you're 55, soon to be 57. You then get a 25% lump sum. But if you put in an ISA, you could start to withdraw that. So there's got to be a discipline if you're going to save alongside an interest-only mortgage. Now, the good thing for dentists, which is primarily our listener base, a lot of dentists are going to own their own businesses and practices. So not only might they have a pension, they might have a practice to sell. It could be a building or it could be the practice with the goodwill of the patients. That's potentially a good strategy for paying off an interest-only mortgage, but there's still no guarantees what the practice might sell for, what the building might sell for, and potentially out your investment performance. So I think we've got to be really careful when taking out an interest-only mortgage and look at it on a case-by-case basis, and ultimately it's going to go to someone's attitude to risk. That's the key in investing in pensions and mortgages. And what risk am I prepared to take? But history tells us investments outperform bank accounts for the last hundred years, but it doesn't necessarily mean it will in the future, and that's why we've got to be careful.

Martin Febery 6:21

Right. So just to finish off, Andy, because I don't disagree with you at all on that. Yeah, the emphasis has to be around planning. So there is you absolutely don't reduce repayments to a mortgage without having a proper plan in place and a reviewable plan. So this is an ongoing thing. This is not a one-shot and off it goes. This is about actually financial planning, which is the the key, in fact, the key to all of these things. But the fact is, you need to be tracking it and making sure that you are going to be in the right position when you want to be in that position.

Dr Ruth Baidoo 6:56

Now, if that resonated with you, you'll find the full property and mortgage special on the main Just 4Dentists feed. Join us on our Facebook community group to keep the conversation going or email our team for specialist advice at info at j4d.co.uk. I'll see you in the next episode of Just4 Dentists. Bye.