Using equity in my home for buy to let investment

welshhughes

Hi
My fixed rate mortgage is coming to an end and I am looking to change my mortgage to benefit from a lower interest rate. My mortgage is about 40% of my property value at present (due to renovations, development in the area and climb in value over 8 years). Also our joint income has increased allowing us to borrow more than we could have when buying the property. Would love some advice on what is the most straight forward way of doing this.:)
Do we simply increase the mortgage to use the finance as a buy to let deposit? What is an off set mortgage?

BitterAndTwisted

Yes, you can re-mortgage your current property and use the funds to buy another. The real question really is should you? There are untold thousands of Buy-To-Let landlords out there and not all of them are finding the experience a good one. Only think of doing this seriously if you can easily afford the mortgage repayments while not receiving a single penny in rent while maintaining the property in order to see the value of your capital increasing over a very long period. Have you looked into your legal obligations to your tenants? If you go ahead you must consider joining a landlords association.

Running_Horse

It's like the credit crunch never happened.

Anyway, try the mortgage forum.

BitterAndTwisted

In your position I would use every penny of disposable income to pay off your current mortgage. Buy-To-Let is risky with no guarantee that you will see a penny in profit in the short-term and it's especially risky for amateur landlords who aren't acquainted with either their legal responsibilities or their local rental market. Nationally rents have been falling and interest rates WILL go up but when is anyone's guess

amcluesent

As soon as the election is over taxation is going to sky-rocket. Houses are easy to locate, so dead-easy to tax and I expect BTL income to be an 'easy' target for politicians to clobber, plus loss of reliefs on costs.

welshhughes

Thanks for the advice.

We recognise the pitfalls of renting and have researched the legal responsibilities over the past 8 months and we would be able to comfortably cover both mortgages if we were unable to rent the property. Although I need to look a little more at possible impact of increased tax on on the budget :eek:

I figured that by using the extra income to cover a second mortgage, we would spread our risk in terms of the volatile market. We intend to live in our house long term and rent the other property long term, and this was a way of taking all our eggs out of one basket, so to speak.

The house also requires renovation and we have the addition funds put aside for this, with quotes that this could increase its value on completion. This would be making our money work harder for us wouldn't it, rather than leave it in a house that has no potential for further improvement?

Thrugelmir

welshhughes wrote: »

Thanks for the advice.

We recognise the pitfalls of renting and have researched the legal responsibilities over the past 8 months and we would be able to comfortably cover both mortgages if we were unable to rent the property. Although I need to look a little more at possible impact of increased tax on on the budget :eek:

I figured that by using the extra income to cover a second mortgage, we would spread our risk in terms of the volatile market. We intend to live in our house long term and rent the other property long term, and this was a way of taking all our eggs out of one basket, so to speak.

The house also requires renovation and we have the addition funds put aside for this, with quotes that this could increase its value on completion. This would be making our money work harder for us wouldn't it, rather than leave it in a house that has no potential for further improvement?

You need to prepare a business plan and crunch the numbers. Property investment needs to be viewed long term. Unlike stock and shares, premium bonds, national savings etc its not possible to drop in and out of the market at a whim.

As has been mentioned before interest rates and taxation rates are only heading one way. So now may not be an opportune moment to invest.

There is no point investing propery if you have to subsiside the venture. That's deceiving yourself. As the money could be earning money elsewhere.

At least by focusing on and reducing your current mortgage you are hedging your bets.