alistairolsen
|
| posted on 14/9/13 at 09:02 PM |
|
|
Anyone on here Buy to Let?
I've been looking at selling my current flat and buying a house, but also renting the flat out and buying a house by remortgaging based on a new
valuation and removing some capital from the flat for the house deposit. I gather I'd need a specific Buy to Let mortgage for the flat, and
looking at those online, most want 80%+ LTV and are interest only? I'd been considering going to 90% LTV on the flat and the same on the house
to make the numbers work, so needing a 20% deposit leaves me short a fair chunk of change!
I also assume I need contents cover for floorcoverings and so on, in addition to the usual buildings cover, but both these policies again need to be
BTL policies? I assume the tenant would then be responsible for their own contents cover for their personal possessions?
Has anyone done similar and if so, any general advice you'd offer?
Cheers
My Build Thread
|
|
|
|
|
Barkalarr
|
| posted on 14/9/13 at 10:14 PM |
|
|
Speak to Mookaloid - he should be able to help.
|
|
|
cliftyhanger
|
| posted on 15/9/13 at 05:29 AM |
|
|
Had btl for nearly 20 years, and kept it small. Shame I guess.....
Anyway, as with any business loan, the lenders want you to take a fair proportion of the risk, hence wanting 20% deposit. You may find a night LTV,
but the rate and/or fees may shoot up.
As to insurance, we have a specific lettings buildings cover, but the excess is pretty high so replacing carpets etc is something we would pay for.
Besides, in leggings carpets need changing more often than your own home.
Do your figures carefully, allow for dead time and agents fees, not just the monthly take but also the large amounts charged when finding tenants
etc.
I would not want to put you off. However you are unlikely to make a profit for the first few years, but times will change. And think of it as a zero
cost investment that should end up being a nice pension pot.
|
|
|
mark chandler
|
| posted on 15/9/13 at 07:57 AM |
|
|
I did this for a few years when much younger, got out because I could not cover the down time and it crippled me.
Make sure you can afford both properties without lodgers for 3 months p.a and do not expect to make £££, this only is realised on resale value.
|
|
|
spaximus
|
| posted on 15/9/13 at 08:50 AM |
|
|
I have a few buy to let's but it is something that you should only go into if you have some money to spare, if not pay off your mortgae on your
home.
At the moment rates are low but I know many who have remortgaed and got buy to lets which they will lose if the rates go up substantially and it will
in the next few years as the economy picks up and the BOE use interest rates to curb inflation.
I use an agent and have not had any issues with tenants but you have to factor in how you would cope with legal costs to evict bad tenants as well.
Factor in repair costs for example if the boiler packs in then it has to be replaced immediatly, not when you can afford it.
I would also never have a flat as a buy to let as you run the risk of more complaints in a block, you also have the problem where service charges can
change and again you have to meet a cost where you have little control.
The idea that you get a better return on property than others investments is now narrowing depending on where you are.
|
|
|
alistairolsen
|
| posted on 15/9/13 at 09:51 AM |
|
|
I suspect at the moment, Id be looking on it as a way to hold onto the flat for another 4-5 years as I'm expecting prices in the area to go up
significantly due to multiple developments currently underway and a massive housing shortfall. As a result, Im not looking for monthly profit, if I
have to subsidise it by a little that's ok too, but I need a tenant to cover the majority of the costs over a 4-5 year period until I sell.
My Build Thread
|
|
|
bi22le
|
| posted on 15/9/13 at 09:53 AM |
|
|
Interesting read and good advice.
I had a thought about doing this in the next few years but decided against it due to risk of empty house and interest going up.
We want to upsize and ultimately I think we wouls be better in buying a bigger or nicer house than juggling money and worrying.
Track days ARE the best thing since sliced bread, until I get a supercharger that is!
Please read my ring story:
http://www.locostbuilders.co.uk/forum/13/viewthread.php?tid=139152&page=1
Me doing a sub 56sec lap around Brands Indy. I need a geo set up! http://www.youtube.com/watch?v=EHksfvIGB3I
|
|
|
cliftyhanger
|
| posted on 15/9/13 at 10:14 AM |
|
|
On the general subject I have been talking to some good friends about all this stuff. We are all now mid 40,s, I of my first btl when I was 26.
Anyway, assume a gross return of 5% obviously varies a little but about right. Also assume about 10% empty, and on a flat maintenance should be well
known, leaving just decor to be paid for. Kitchens seem to last pretty well despite student let's, carpets about 5 years but I buy cheap.
Initially expect to loose about 20% of the income against mortgage, but that improves fairly quickly, should be cost neutral in 3 or so years. Then
you should start to make a small profit.
Play it right, don't take any profits and I reckon the flat will be paid for in 15 years. Think, you will then own the flat outright, and also a
regular monthly income. Nice.
As an example our first btl place is now about paid up, and the income is 40% of what we paid. Still only about 7% of current value, but you get the
idea.
All my figures assume interest rates stable etc. But we have seen ups and downs over the years. It is a risk, but I reckon worthwhile.
|
|
|
thefreak
|
| posted on 15/9/13 at 12:30 PM |
|
|
If you currently own the property, you could always have a chat with your current provider.
Tell them you're looking at working away for 12-18 months and want to let your place out for the time you're away. Most will let you no
problem in which case you don't need to change your mortgage to a BTL.
When you go for your new place, it's probably a good idea not to go for the same provider, but whoever you go for will want to know if
you've got another mortgage, and as long as your bringing in the required percentage from the flat, they won't care.
I know many people who've gone about it this way, and neither provider are particularly bothered as long as they get their money.
Sometimes doing things the way they're supposed to be done just lines other peoples pockets!
|
|
|
alistairolsen
|
| posted on 15/9/13 at 02:38 PM |
|
|
Yeah I was reading about let to buy, and consent to let last night, might make things easier if they'll do it, but it seems common to only grant
consent to the end of the current mortgage deal.
My Build Thread
|
|
|
thefreak
|
| posted on 15/9/13 at 02:42 PM |
|
|
Mine rolled onto the SVR a couple of years ago without any problems.
|
|
|
alistairolsen
|
| posted on 15/9/13 at 07:56 PM |
|
|
Interesting, would be nice if mine did. I've got an appointment with the mortgage adviser this week so will see what he has to say about it all
too
My Build Thread
|
|
|
