Do you think I can buy this house?

mpg

Fly_Baby wrote: »

I agree with what you are saying but the BTL-ers are not exactly crushing debt onto THEIR children. Because their children will either inherit that BTL or might even get it as a free/cheap house to live when they are ready to move out.

So BTL-ers are essentially helping their own children.

I know of a landlord that had over 1000 properties. and is cash rich He's built it up over 30 years and doesnt have any mortgages anymore. I doubt his kids are in debt.

mpg

Arthritic_Toe wrote: »

Yeah but they haven't, because in the OP's case you will only get 800 per month in rent, but the repayment mortgage will cost you 1500 a month. There may be more profitable ways to invest the additional 700 that will deliver a better return. Many people have dived into BTL without doing the maths.

£700 pm over 25 years will give £210k not inc interest. A £260k house would more than likely more than double in price in 25 yrs. so the sums still stack up.

I doubt BTL is the problem its the developers who buy the cheap houses that need work doing that are taking away the FTB .

In the past your 1st house was one that needed work doing to it. nowadays that work has been done by a developer

Arthritic_Toe

mpg wrote: »

£700 pm over 25 years will give £210k not inc interest. A £260k house would more than likely more than double in price in 25 yrs. so the sums still stack up.

Well, assuming 5% interest on savings, you would end up with 420k by just sticking it in the bank and putting your feet up for 25 years.

Even if your 260k house has doubled to 520k, you will have had 25 years of aggro, cost, time and hard work in the form of maintenance, voids, letting agents, tenancy agreements, obnoxious tenants etc. Is it really worth it?

getmore4less

Why not wait for the OP to tell us how profitable the 2 BTLs are.

The current problem is the OP does not have the funds(deposit) to actualy buy the place he wants, currently renting it on a 3.7% gross yield for the landlord.

getmore4less

Arthritic_Toe wrote: »

Well, assuming 5% interest on savings, you would end up with 420k by just sticking it in the bank and putting your feet up for 25 years.

Even if your 260k house has doubled to 520k, you will have had 25 years of aggro, cost, time and hard work in the form of maintenance, voids, letting agents, tenancy agreements, obnoxious tenants etc. Is it really worth it?

Don't forget the CGT bill when you liquidate.

Arthritic_Toe

getmore4less wrote: »

Don't forget the CGT bill when you liquidate.

- true, but there's also tax on your savings interest.

When_is_the_reset?

mpg wrote: »

Looking to the future If you were to purchase a house NOW on a 25 yr Interest only mortgage and rented it out and in 24 yrs time sold said property then that would clear capitol and leave a nice excess.

There is no way that house prices will be less in 25 yrs time than they are today

Tell that to Mr & Mrs Nagashimi of Tokyo.

When_is_the_reset?

My point in all this is that the easy credit has meant that people have been able to afford higher house prices and the banks were willing to lend it to them.

"Why not buy another BTL house and what the hell offer another £10k to make sure we get it - we will get that back in a year anyway" type of thing. It does not matter if the yields are low - capital growth is what it is all about. Subsidise the rent it doesn't matter.

This is what I mean by denying the young couple getting their own home, they cannot afford to use the burgeoning equity in the house they bought 30 years ago to put down as a deposit.

Now it comes to the BTL'ers selling to fund retirement or paying off the mortgage - they think that they deserve the massively overinflated price that they helped cause in the first place.

They are insisting that the younger generation work harder, longer and get more indebted to get them out of the scheme. Only when it reaches critical mass (now?) and there are less people feeding the pyramid.... what happens then?

I am sure more the penny will drop sooner or later and, infact, tighter lending and decreasing property prices will sort things out eventually.

My personal opinion - as a house owner with a small mortgage - is that I would like to see houses at a sensible level that my daughter will be able to afford without spending the majority of her salary servicing debt.

WITR?

PS - Living through a massive housing bubble and, by chance, buying a house in 1980 or whenever and now having £xxx,xxx.00 equity - does not make you Warren Buffet.

Rant over.

mpg

I have equity in my house because i overpay my mortgage.

House prices being reasonable.... I would love that too If house prices where say halved Icould aford to buy a mansion.

People will always want for more there's not many people out there who would buy a house that "would do" If you can afford a £300k house I cant see you buying one for £100k

The problem is people over stretching.

surreybased

mpg wrote: »

The problem is people over stretching.

I think this is the point others are trying to make about the original question - the view from most people is that they are overstretching. 3 mortgages, limited equity. If BTL is a business then the gearing would be too high. I think this is the issue - the recent credit bubble has tried to rewrite sensible financial metrics.They comes a point when the risk is too high.