buying a second house to let,waht would you do for the best.

deano72_2

i want to buy a second house to let.ok this is what iv got to play with.
my current house is worth £125 000 - £127 000 i have £60000 left on the morgage (repayment)
the second property i could get for £135 000 & could rent it out for £1100 a month.
so should i pull some eqauty out off my current house & put a big deposit down on the second house,if so would it be best to get just an intrest only repayment morgage for the second property or a total repayment morgage on the second property.

silvercar

Generally buy-to-let mortgages require a 15% deposit, you may be lucky and find someone prepared to lend to you with a 10% deposit but you will need to find some sort of deposit.

furby-2003

where is the house? thats very steep rent for the value property. ours is half that for a more expensive property

deano72_2

ok the deposit would not be a problem as i could pull this from my current house.
as for a steep rentle price,its not what you know,its who you know.this figure is a fact,so thats all there is to it.cheers

silvercar

So you will need about £20,000 for a deposit add to that stamp duty, legal costs, survey etc, say another £3,000. You could get this by increasing your mortgage on your current home (Don't forget your home is at risk if you cannot keep up repayments......). Presuming you are able to increase your current mortgage.

Then get a BTL (buy to let) mortgage at 85% LTV (loan to value). Your rental need to cover your repayments by 125-130% but you should not have a problem with this.

Remember to allow for unexpected maintenance costs on the BTL and rental voids when you don't have tennants.

Pal

For income tax reasons you should maximise the mortgage on the BTL property and minimise the mortgage on your own house.

Tassotti

Wow 9.7% yield. Where is this? I could do with some of that.

Remortgage your property to release deposit and fees.

Get a BTL mortgage on new property. Borrow as much as you can on the rental property as the interest is tax deductible.

By my calculations, you should have around £650/mth profit on rent (before tax, expenses, etc). Use part of this to pay off the extra borrowing on you home.

silvercar

Interest (but not capital) repayments on a buy to let are tax deductable. Whichever property you take the loan on you can count the interest as a tax deductable expense. If you take the mortgage on the BTL property its more obvious but if you do it on your main residence and you can show (dates of additional loans etc) that the purpose was for the BTL you can still count this as a tax deductable expense.

codetown

deano72 wrote:

ok the deposit would not be a problem as i could pull this from my current house.
as for a steep rentle price,its not what you know,its who you know.this figure is a fact,so thats all there is to it.cheers

Hi,
I don't think the pal was contesting the fact you can get such a rent. He/she was just asking where in the country you can get such ratios.

I would also be interested, as I have been thinking to a buy-to-let as an investment option myself and your figures look extremly attractive.

So, given you come here and get some help from others, so why not help those who ask Even only indication of the general area where this property is located could be of interest.

lynzpower

Housing benefit is paying those rates in inner london, and you can still get properties for 135k here ( although of course needing work). Im also led to believe by a collague of mine who has a place outside london that theres a scheme she uses with NHS which gives her guaranteed rent, and is pretty high yeild. Maybe thats what hes on about.

lynzpower

Someones guarding their secret arnt they, but whoever said "if a plan seems too good to be true ,it probably is"