BTL ..... who should pay?

chucky

Thrugelmir wrote: »

Whose name is the mortgage in?

all of them are in the Ltd Co name

Thrugelmir

chucky wrote: »

no the market dictates the price - values have gone up, this is due to market conditions. this is a 2009 market, you cannot apply 2007 or 2008 rules to your theory.

I think that we're agreeing.

Low volumes are affecting prices. As its currently a buyers market. Sentiment could change within days though.

Markets are inefficent. As a house is a long term committment. A few thousand pounds on a 25 years mortgage is very subjective. As emotion rather cold bloodied finance takes hold when purchasing. When viewing what one can buy, it's only relative to the price of other properties on the market.

nearlynew

Don't forget that HPI cheerleaders don't have money, they have equity.

Most BTL deposits were paid for not with savings but by MEWing. The repayment of which is often ignored in any calculations.

Without HPI they cannot buy another property. Which is why all those muppets who said they would buy more houses when the prices drop are not doing so.

chucky

nearlynew wrote: »

Don't forget that HPI cheerleaders don't have money, they have equity.

you must be in an excellent position to see posters bank accounts?
do you identify them ny HPI cheerleader before or after their name?

nearlynew wrote: »

Most BTL deposits were paid for not with savings but by MEWing. The repayment of which is often ignored in any calculations.

rubbish - it was cash from contracting.
where else should the cash go.
another rubbish point.
my pension is well contributed to, ISA maxed out etc etc etc

nearlynew wrote: »

Without HPI they cannot buy another property. Which is why all those muppets who said they would buy more houses when the prices drop are not doing so.

another rubbish point - prices have been rising for 7 months.

you're starting to look a bit of a clown nearlynew with your sound bites

'Inflation is theft'
'HPI cheerleaders'
'debt junkies'

you've done well out of property - so you're the last one that should be talking about HPI and equity

nearlynew

chucky wrote: »

you're starting to look a bit of a clown nearlynew with your sound bites

'Inflation is theft'
'HPI cheerleaders'
'debt junkies'

My soundbites have obviously left an impression on you chucks.
I would consider that successful communication.

By the way, you missed out "debt is not wealth"

chucky

nearlynew wrote: »

My soundbites have obviously left an impression on you chucks.
I would consider that successful communication.

By the way, you missed out "debt is not wealth"

you're right i did forget "debt is not wealth"

but no, you haven't made any sort of iompression on me - that was wageslave

nearlynew

chucky wrote: »

you're right....... "debt is not wealth"

I'm glad you agree.

penguine

Did it used to be the case in the UK that you weren't allowed to rent out a property unless you owned it outright? I thought I heard this somewhere years ago but I don't know if it's really true or not.

IveSeenTheLight

Thrugelmir wrote: »

For my sins. I've spent my life in finance. Across a spectrum of Companies and Organisations.

BTL is not different. Whatever a business does or how it does it. The fundamentals are the same. To make a profit. Either in income or capital gain.

Then I'm sure from the various responses, you should be able to understand how it can work, yet you seem to purvey it can't.

Thrugelmir wrote: »

In order for a BTL property mortgage to be discharged. The investment needs to generate an after tax profit to repay the capital debt. Thats a fact that inexperienced BTL investors overlook. Basing a return on historic capital growth alone is a pure gamble. Whilst returns have been exceptional in recent years they are not sustainable. I've yet to see one reasoned post as to how prices could possibly increase at a high rate in the next 10 years.

Totally agree with the forst part i.e. rent covering capital repayment, which it can do. It does with my BTL's

Don't agree with the part about relying on capital growth, I don't although it will be a bonus.

You quote 10 years, but most BTL's are in it for a long term investment.
I personally am planning to be in it for at least another 30 years

Thrugelmir wrote: »

To achieve capital repayment of the mortgage the property needs to generate an increasing level of rental income. As the offset of interest progressively diminishes as the interest reduces. Most BTL mortgages are on an interest only basis. So exposing the mortgage to risk of high interest rates.

Why does it need to generate a higher level of rental income?
The capital debt is fixed at the time of purchase and does not increase.
Of course mortgage rates can vary as does every other mortgage product out there, but generally they can be fixed for periods of time

Thrugelmir

IveSeenTheLight wrote: »

Then I'm sure from the various responses, you should be able to understand how it can work, yet you seem to purvey it can't.



Totally agree with the forst part i.e. rent covering capital repayment, which it can do. It does with my BTL's

Don't agree with the part about relying on capital growth, I don't although it will be a bonus.

You quote 10 years, but most BTL's are in it for a long term investment.
I personally am planning to be in it for at least another 30 years



Why does it need to generate a higher level of rental income?
The capital debt is fixed at the time of purchase and does not increase.
Of course mortgage rates can vary as does every other mortgage product out there, but generally they can be fixed for periods of time

I fully understand how BTL can work. Given the right environment. For those that seized the opportunity at an earlier enough stage in the market. They've done exceedingly well.

However looking ahead and in particular for investors that bought in the past 5 years the prospects aren't as good.

I understand your points. But I have severe reservations. Not in BTL in particular but on the medium term credit/lending markets. This is going to affect any form of leveraged , borrowed, geared investment.

Lets watch events unfold. I would say plenty is going to happen in the next 12 months that will cause debate on this forum.

By the way if you are repaying capital then your BTL model works. My issue is that unfortunately many aren't. This may well hit your investment directly as the market has yet to react to this problem.