Im mortgage free looking for mortgage? Good idea?

on_the_run

We are currently mortgage free (lucky us I know!), but are thinking about mortgaging our house to raise deposits on 2 new investment/ buy to let flats. We are in our late 30's.

Our thoughts are that the mortgage on our house, and buy to lets wd all be interest only for 25 years. The rent of 2 flats will nearly cover the costs of the 3 mortgages.

As we are out of touch in the mortgage field, we are finding it a bit mind boggling deciding whether to go for trackers (if still available), variable or fixed rates. We are not relying on interest rates being so low for ever, and have calculated our costs if it goes to 10%.

So, a few qu's/ thoughts appreciated please...

1. In the current climate seeing how pensions etc are going surely this is a good idea?

2. Wd the flats have to be buy to let mortgages?

3. Which type of mortgage wd you go for in our possision?

Any other thoughtd/ advice wd be much appreciated.
Many thanks

unite79

1 = No - Why would you want to Invest in something that is predicted to decrese by 10% this Year ( I personally think we are close to the bottom of the Housing market in some areas, however, Voices far more wise than me Disagree - Also - Reality - If we have reached the bottom - Bearing in mind funding from lenders is almost not happening now, prices will not exactly run away)

2 = Yes

3 = Avoid like the Plague at the moment.

Wait for at least 3 months and see what is happening to the economy - WE HAVE ENTERED UNPRECEDENTED WATERS - Economists in America are Advising to pull out of England - Which is worrying cause I thought we were in less of a mess than they were.......

Just My opinion, which you asked for....

Sorry...

socrates

There are 3 experts who will answer this one anon ...

_Andy_

1) No
2) Yes
3) You need to speak to a decent whole of market broker who can guide you through the process if you still think it's a good idea.

ceepee1

Hi

Yes, lucky you (and nice one!!) If you are mortgaging your house and using the equity to buy 2 flats why would you have 3 mortgages?...or are you taking out mortgages on the flats as well?

on_the_run

O dear. We assumed it was good idea. All thoughts appreciated.....

To answer ceepee1, yes, the mortage on our house would pay for the deposits on 2 flats so mortgaes needed on all 3.

unite79

In which case, let us assure you now is not the time for such a risk, leave it 3-6 months and look again, the bottom/time is closer than some predict - But IT AINT YET in my OPINION.

ceepee1

I cant comment on english market but in scotland buy to let is becoming even more popular. I would be inclined to go and see a good IFA. Perhaps you should consider buying one rather than 2 in the first instance. Remember there are also tax implications on rental income depending on your financial circumstances. good luck!

unite79

ceepee1 - I am surprised by that, I thought the Scottish Economy and housing market was as bad/if not worse than England - I am pleasently surprised - Does this mean your Buy 2 Let market has not been done to Death like England - or are you over the worse......

ceepee1

Rental market pretty good (obvioulsy depending on area). Should level off shortly but as first time buyer lending becoming increasingly difficult, renting is becoming more popular. Media seem to have caused fear for first time buyers who even can afford it which is having a huge impact on new build market hence so many redundancies.

silvercar

Our thoughts are that the mortgage on our house, and buy to lets wd all be interest only for 25 years. The rent of 2 flats will nearly cover the costs of the 3 mortgages.

So why do it?

If the rents won't quite cover the mortgages, and you have other expenses like maintenance, covering voids, registration etc, what are you gaining? Nothing, in fact you are losing money each month.