chris mason
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| posted on 30/8/11 at 05:15 PM |
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Buy to Let mortgages
Seeing as this forum is the font of all knowledge, what expertise do we have on here with regard to "Buy to let mortgages"
I've the chance to buy a house worth 130k, but the owners require a quick sale for personal reasons, as such i've got the chance to buy
for possibly 105k.
I've got 15k available to use as a deposit, so i'd need to mortgage the other 90k, according to my personal banks btl mortgage calculator
i would be entitled to a 254k btl mortgage (when taking in to account my current liabilities) so this appears well within my reach as far as there
calculators say.
I could afford the mortgage payments even if the house stood empty, so this doesn't concern me much.
The house should fetch a monthly rental income of between £600-750 according to other in the area, the house is approx 18 years old and is in very
good condition, basically ready to rent.
Nver really looked in to anything like this before and the oppurtunity has pretty much just come to light in the past hour, on paper with my limited
knowledge it seems like i'd be daft not too go for it, any thoughts?
Thanks
Chris
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RickRick
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| posted on 30/8/11 at 05:26 PM |
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we have a BTL taht we took out just over a year ago, and found 2 issues that might cause you trouble
the setup cost of lower interest rate btl's is stupidly high took us lots of hunting to find one, some were talking about 5k for 80k loans!
the other again relates to getting a decent interest rate, the amount of deposit, all the better deals wanted atleast 25% deposit.
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daviep
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| posted on 30/8/11 at 05:27 PM |
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Could be wrong but I think you'll need a minimum of at least 30% deposit and probably 40% to get the best rates, so you'll need £31.5k as
a deposit minimum.
Could be wrong, best to take some advice from a broker I'd have thought.
Davie
“A truly great library contains something in it to offend everyone.”
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AndyW
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| posted on 30/8/11 at 05:29 PM |
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Go and speak to a financial advisor, one who is not tied into a panel of lenders. You will get the correct info. I used to work in an independant
estate agents and know what the score is with BTL, but I would not offer financial advice as Im not qualified to do so. Get the right advice from the
right person.
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JoelP
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| posted on 30/8/11 at 05:33 PM |
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mortgage and quick sale doesnt work very well! However, sounds ok on paper. Would the payments on 90k be about 500 over 20 years? Assuming you get 675
for ten months every year, thats only £600ish left over every year to maintain it, gas inspection, insure etc. Still nice to be getting the mortgage
paid off though.
I spent about £20k refurbing a place that only rents for £4800 a year, which doesnt seem really worth it looking back!
Beware! Bourettes is binfectious.
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chris mason
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| posted on 30/8/11 at 05:35 PM |
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Thanks for the input so far,
Regarding the deposit, due to us securing the house at less than the market value, our ltv figure is under 70% having had a quick look around we are
looking at btl mortgage deals that would give us a repayment of just over £500pcm, with a 2.95% rate making under 5% apr.
Not really too clued up on these matters, and the advise i require isn't available until early next week due too work 
Obviously i appreciate that internet advise can be misleading or factually incorrect, but i know there is some on here who have experience in this
field 
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chris mason
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| posted on 30/8/11 at 05:41 PM |
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quote:
Originally posted by JoelP
mortgage and quick sale doesnt work very well! However, sounds ok on paper. Would the payments on 90k be about 500 over 20 years? Assuming you get 675
for ten months every year, thats only £600ish left over every year to maintain it, gas inspection, insure etc. Still nice to be getting the mortgage
paid off though.
I spent about £20k refurbing a place that only rents for £4800 a year, which doesnt seem really worth it looking back!
Yes Joel, your figures are pretty close, i'm not looking at it as a short term deal, more a pension fund, buy the house now, hopefully the rent
pays the mortgage and then in time, either sell house or continue to rent.
Long term i'm hoping to own quite a few properties to pay may way through old age (32 years until i reach retirement age)
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laptoprob
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| posted on 30/8/11 at 06:04 PM |
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Am doing the same as we speak and can confirm my findings are similar to above comment....
Go for at least 25% deposit to avoid stupid setup costs.
There is plenty of deals out there at 3% ish but check the costs. I think you`ll find that deals nearer to 4 or 5% will be zero setup costs. Do the
math and you will see that it makes sense to go with the slightly higher deal(which you can generally change within 1-2 yrs anyway)
I use a chap called Stuart Black of Mortgage Solutions in Bradford he is a great help.
http://www.youtube.com/watch?v=ajlF4nWJtGA
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OX
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| posted on 30/8/11 at 06:10 PM |
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hi chris ,you know richi, my brother ,well he's just brought his 4th house and 3 years ago i brought my second and as soon as we mentioned buy
to let we felt like we were getting stung on the interest rate ,i only started making money on my house at the beginning of this year .
I wish i had just told them i was doing it up to sell on ,naughty i know but then would of made money from the day the tenants moved in .
u2u me your number and i'll pass it on to him ,he's always up for talking house 
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spiderman01980
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| posted on 30/8/11 at 06:13 PM |
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quote:
Originally posted by chris mason
quote:
Originally posted by JoelP
mortgage and quick sale doesnt work very well! However, sounds ok on paper. Would the payments on 90k be about 500 over 20 years? Assuming you get 675
for ten months every year, thats only £600ish left over every year to maintain it, gas inspection, insure etc. Still nice to be getting the mortgage
paid off though.
I spent about £20k refurbing a place that only rents for £4800 a year, which doesnt seem really worth it looking back!
Yes Joel, your figures are pretty close, i'm not looking at it as a short term deal, more a pension fund, buy the house now, hopefully the rent
pays the mortgage and then in time, either sell house or continue to rent.
Long term i'm hoping to own quite a few properties to pay may way through old age (32 years until i reach retirement age)
i was about to say, its only worth doing if you see it as a pension investment and not as a get rich quick, also there could be a good chance you
could turn it into a doctors surgery or dental surgery, am lucky to own mine outright and have been looking to turn the ground floor in to a dental
surgery.
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chrisspartan
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| posted on 30/8/11 at 06:27 PM |
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I think buy to let is a good investment as long as its the right house and generally you are in for the long term. Just a couple of points to bear in
mind, I am sure u know, but you will need to pay income tax on the rent (less your expences and mortgage interest) and it doesn't take many
'empty' months to burn up your profit margin. Just get a good tenant. The last 3 applicants for my last house had all been bankrupt and
they didn't think I would check up on them!
Chris
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designer
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| posted on 30/8/11 at 07:01 PM |
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What's this got to do with cars??
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chris mason
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| posted on 30/8/11 at 07:10 PM |
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quote:
Originally posted by designer
What's this got to do with cars??
Being in the Non-Car Chat section............................. Nothing!
Your point exactly?
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plentywahalla
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| posted on 30/8/11 at 07:57 PM |
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quote:
Originally posted by chris mason
Thanks for the input so far,
Regarding the deposit, due to us securing the house at less than the market value, our ltv figure is under 70% having had a quick look around we are
looking at btl mortgage deals that would give us a repayment of just over £500pcm, with a 2.95% rate making under 5% apr.
Not really too clued up on these matters, and the advise i require isn't available until early next week due too work
Obviously i appreciate that internet advise can be misleading or factually incorrect, but i know there is some on here who have experience in this
field
Mortgage companies will calculate loan to value based on your deposit against the actual purchase price.
Particularly in the present climate they will consider the market value of the property to be whatever someone is able to sell it for.
You will need to put up 25k to 30k to avoid paying a high risk premium on the interest rate.
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Peteff
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| posted on 30/8/11 at 11:25 PM |
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There are a few rented terraced properties down the road from us which are let by agents and they are not bad houses but they are let to DSS tenants
who have been denied or evicted from other properties and every time they come empty it costs a couple of thousand to get them back to letting
standard. Vet your tenants and don't employ an agent to do it for you.
yours, Pete
I went into the RSPCA office the other day. It was so small you could hardly swing a cat in there.
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JoelP
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| posted on 1/9/11 at 08:30 PM |
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quote:
Originally posted by laptoprob
I use a chap called Stuart Black of Mortgage Solutions in Bradford he is a great help.
Mortgage Solutions rings a bell, did a chap called Graham Clynes use to work with them? Used to use him in the leeds area for mortgages.
Beware! Bourettes is binfectious.
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laptoprob
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| posted on 2/9/11 at 06:48 AM |
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quote:
Originally posted by JoelP
quote:
Originally posted by laptoprob
I use a chap called Stuart Black of Mortgage Solutions in Bradford he is a great help.
Mortgage Solutions rings a bell, did a chap called Graham Clynes use to work with them? Used to use him in the leeds area for mortgages.
Cant say ive ever spoken to anyone other than Stuart or the young lady that works there too but he has been around a while and pretty well known in
the area
http://www.youtube.com/watch?v=ajlF4nWJtGA
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cliftyhanger
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| posted on 2/9/11 at 07:39 AM |
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Re letting and taxation....
If you let "furnished" the taxman allows you to take 10% of the gross income (that is very useful) out of the tax equation to cover wear
and tear. Means you cannot also put in receipts for replacement stuff. Covers furnishings, which includes washing machines etc (unless built in).
The flat we rent out comes with a sofa and a rug, so qualifies
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Alfa145
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| posted on 2/9/11 at 09:38 AM |
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Best advice is to get hold of an Independant Financial Advisor, not one that charges. Give them the details and see what they come back with. Used one
for my first mortgage and he was amazing, saved me a fortune and explained everything very clearly..
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