Poor house purchase decision

blizeH

Thanks, but do you think? The only reason I'd consider a second mortgage is because the money I'd get from rent should be able to cover both mortgages, so any salary I have will just be used to pay for regular living costs.

Best case scenario is it'd make me very financially secure in the future, having two reasonably priced houses, worst case scenario is that I'd have to sell one of them and just concentrate on a single mortgage, which hopefully will be quite small by then. Unless I'm just being incredibly blinkered/naive which honestly wouldn't surprise me...

BitterAndTwisted

I think you are being naive. Owning a second property and becoming a professional landlord isn't just a matter of getting another mortgage and popping a couple of chums in there.

We have threads on here every single day of the week started by people with no prior experience of being a landlord who have found themselves in several feet of !!!!! due to their innocence and/or blissful ignorance about tenancy agreements, repairing obligations, landlords insurance, gas-safety certificates, the tax-implications etcetera etcetera. In the next few years I believe that there will be rather a lot of folk losing their jobs and not being able to pay their rents. That could mean your tenants not paying you.

In my opinion you'd be much better off over-paying the mortgage and building up the equity in the property you own now, especially as the interest-rate on the mortgage is likely to be higher than any savings-account you could probably find.

cte1111

I think it is quite difficult to get mortgages on 2 houses in the current market.

If you are seriously considering this as an option in the near future then I would advise applying for one now in principle and seeing how you get on. If there are lots of mortgage companies happy to offer you a mortgage in principle, then you're sorted and can continue to consider your options. But I fear it is more likely that you will be unable to raise a second mortgage.

I bought my first house when I was 23 and a buy to let when I was 25. That was ten years ago and I was able to get a buy to let mortgage without too much hassle. From what I read in the papers and on here, that is not so easy nowadays.

TBH I would not be considering doing the same now. The housing market is still likely to fall in the future and you will be left with 2 depreciating assets. I would move into your house and give it 6 months. If you decide after that period that you want to be nearer your GF then maybe you could think about renting somewhere together and renting out your house.

hazyjo

Depends if the mortgage company will accept 'rent' as payment for the 1st mortgage and give you the 2nd mortgage based on your whole salary. I don't know how strict they're being on things like this, especially if you have no LL experience.

Also, why not just sell the first house and then you'll not need the rent money to be covering the other mortgage. Why not just pay it? Are you remembering how much bills, maintenance, etc add up to?

I pay roughly £500 a month on my mortgage. I could rent it out for roughly a grand. But that doesn't mean I could take on another equally sized mortgage and buy a similarly sized house effectively for free...

Jx

JoeA81

Unless I'm missing something you seem to be in an extremely strong position at the moment - as you say your mortgage is only 70k, on a house worth 226k (assuming it is still the same value), which is a LTV of 30%!

I trust with such an amazingly low LTV you are currently on one of the "better" mortgages on the market (for example the HSBC 1.69% + BR tracker springs to mind).

If you need to get cash together for a deposit for a new house then overpaying your current mortgage isnt going to help - as you wont be able to get that money back without either selling the house, or re-mortgaging at a higher LTV to release some of the equity that you have in the house. Or just save everything and pay the minimum towards the mortgage.

Unless I am misunderstanding the figures, you put down a 156k deposit for your current house, that seems to me to be the best source for your new deposit if you need it ASAP...

GDB2222

Leaving aside the practicalities for a second, how convinced are you that house prices are going to go up over the next year or two? It's that timescale you need to look over, because I guess that in a couple of years you'll know much better where you want to live etc.

Your present house is not one I would have bought as a BTL. The rental yield is too low, and if you are aiming at top whack rent for the neighbourhood you'll have long void periods. Even if you get £12k a year rent, the yield is 5.3%, out of which you'll pay 1% for management, lose 0.5% (at least!) for voids, maybe 1% more for repairs/redecs/insurance/gas safety etc. So, I doubt you'll have more than 3% left over.



If i were in your position, I would still rent out your house, nevertheless, but purely on a temporary basis as 'insurance' against your move to London (or wherever) not working out as you wish. For the same reason I'd only rent in your new location. I'd suggest you sell your present house as soon as you are settled elsewhere and buy somewhere to live in, and if you really hanker after BTL buy a more suitable propety for that purpose.

Meatballs

Sorry ot:

Do people seriously commute in a car for 3 minutes (barring the disabled)? :eek:

blizeH

It's just under 2 miles, so yeah!

And thank you so much again for the replies guys, seems I have a lot of options available to me then... my interest on my savings accounts don't vary too much from my mortgage so maybe the safer bet for now would be to simply keep it in savings then? Just for the potential scenario Joe mentioned, although I have to say the more I think about it, the more it might make sense just to sell the thing as I will have no intention of ever living there again (really the only reason I bought it was cos it was close to work). Will look up rental yield now as (I'm ashamed to admit...) that kinda went over my head a little, although I can see your point totally.

So yeah, selling my house and either buying one with the money leftover (hopefully somewhere small where I won't need a mortgage!) or using the interest I'd be getting from the money towards rent seems like the best two options right now.

neverdespairgirl

blizeH wrote: »

It's just under 2 miles, so yeah!

You need a bike, mate!

BaldPlumber

neverdespairgirl wrote: »

You need a bike, mate!

No, no, no - he needs a second car - it'll probably go up in value.