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Renting at a loss (future gains in mind)

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  • Voyager2002
    Voyager2002 Posts: 15,287 Forumite
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    mstr wrote: »
    Hi,

    Yes I know how they work, all things being equal the more of the mortgage paid off the more equity I will own and that seems to 'unlock' better interest rates so the payment should come down ( to a point ) - now that might be flawed logic and not the understanding of mortgages.

    No.

    If you manage to pay off more of the amount you borrowed (as well as interest) you then become eligible for better deals, but in order to get them you would have to remortgage: this is not something that happens automatically. And the process is likely to take a good deal longer than three years...
  • mstr
    mstr Posts: 10 Forumite
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    Voyager2002 wrote: »
    No.

    If you manage to pay off more of the amount you borrowed (as well as interest) you then become eligible for better deals, but in order to get them you would have to remortgage: this is not something that happens automatically. And the process is likely to take a good deal longer than three years...

    Thanks and yeah quite aware of this, yes of course its not an automatic process lol ( it's quite safe to assume for a moment I know what remortgage means ;-) ).

    Seriously I see the big picture, and looking long term.

    For those interested three years is just the minimum length of the contract ( so infer it as a 3 year rolling, but there are longer terms) - "If" I went ahead then and they turned out to be pretty good then I would probably go the term ( or at least half ), at that point the LTV should kick up some pretty good deals.

    Hence eventually equalize.

    Now obviously if interest rates increase significantly in these 3 year terms then well I just cant sell up ( not that selling would be quick anyway )...... something to balance out.

    Now its a shame people here haven't dealt with the council ( kinda was looking for their experience ). Though I do know someone who A the voids ( puts the houses back to standard after tenants leave ) for a house association and its mainly just minor work ( everyones mileage varies of course).

    But now going to put everything on hold, elsewhere things are not all roses as I thought. Thats life though. Will revisit in 3 to 6 months time.
  • MEM62
    MEM62 Posts: 4,754 Forumite
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    mstr wrote: »
    The shortfall is a problem and my thinking is as they pay the bulk of the mortgage i should not be to long before it equalizes.

    Have you also taken into account your tax liability when calculating your figures? There are some allowable costs against which you can offset the tax but basically you will be loosing 20 or 40% of your rental income to tax depending on which tax bracket you fall into.
  • MEM62
    MEM62 Posts: 4,754 Forumite
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    Maybe not then :-)
  • eddddy
    eddddy Posts: 16,448 Forumite
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    Regarding leasing to the council - the issues I've heard about include:

    1) An LL lived in the property before leasing it to the council. The council tenants dealt drugs, petty crime immediately around the property rocketed. The LL's ex-neighbours knew the LL personally, and traced her new address, and blamed her for the situation, and badgered her to do something about it.

    2) Councils don't like to evict - especially without cause. Ask the council what happens if a tenant refuses to move out after 3 years.

    3) Does the council's contract put a cap on the damage they will pay for at the end of the 3 years? Sometimes the cap is 3 months rent. If the property is trashed, that may not be enough.


    Here's a couple of similar horror stories:

    http://forums.moneysavingexpert.com/showthread.php?p=42455250&highlight=#post42455250

    http://www.landlordzone.co.uk/forums/archive/index.php/t-24706.html
  • abby1234519
    abby1234519 Posts: 1,961 Forumite
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    Crashy_Time wrote: »
    Evidence please.....

    Do I count as evidence? House that is close to my work went up for rent thats bigger and at a lower cost. I like my house enough not to move even though the double glazing is shot and our neighbours are horrific.
    Money money money.

    Debt
    Dec 2016: [STRIKE]£25,158.71[/STRIKE] £21,999.99

    #28 Pay off debt in 2017 £3803.55
  • System
    System Posts: 178,094 Community Admin
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    abby1234519 wrote: »
    Do I count as evidence? House that is close to my work went up for rent thats bigger and at a lower cost. I like my house enough not to move even though the double glazing is shot and our neighbours are horrific.

    I can add my own anecdotal evidence to this. Lived in the same flat for 4 years and never looked for somewhere else. If I could have got somewhere else for less money I wouldn't even have known about it! That was despite multiple rent increases. I don't think it's unfair to suggest that most people would value stability over a few quid saved in rent.
  • Pixie5740
    Pixie5740 Posts: 14,515 Forumite
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    Sometimes it's better the devil you know when it comes to renting.
  • Crashy_Time
    Crashy_Time Posts: 13,386 Forumite
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    Pixie5740 wrote: »
    What does that have to do with the fact that even after being reported to the council she continues to commit a criminal offence by renting out properties? Yes landlords must be registered with the council(s) in which they let out properties but I have yet to hear of one rogue landlord being prosecuted.


    The good news is that the tide is turning up there now, anyone who lets out substandard dross is going to have a lot of voids IMO.


    https://www.eveningexpress.co.uk/fp/news/local/latest-aberdeen-house-price-drop-the-worst-in-uk/
  • Crashy_Time
    Crashy_Time Posts: 13,386 Forumite
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    x-caitlin-x wrote: »
    I can add my own anecdotal evidence to this. Lived in the same flat for 4 years and never looked for somewhere else. If I could have got somewhere else for less money I wouldn't even have known about it! That was despite multiple rent increases. I don't think it's unfair to suggest that most people would value stability over a few quid saved in rent.


    So your "multiple rent increases" only amounted to "a few quid"?
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