Mortgage Free - so good they'll do it twice! Wynnvegas aiming for the big house

wynnvegas

Thanks US,

I hadn't much considered the tax piece. I was hoping to effectively break even on the venture for at least a couple of years so that all the rental income would not actually make us any money. Where we'd look to benefit would be in the sale of the rental place or the rental income once the mortgage is gone on the BTL properties. I'm speaking from a high level of ignorance here so there will doubtless be a best way to do this that I don't have a clue about yet. My thoughts were toward using our own money to overpay the BTL mortgage(s) but that doesn't seem a popular strategy in general terms - I'll get the full story next week. Once we know how much we as a collective can borrow and get a look at a few available properties, it will start to become real at that point.

Cheers,

Billy

abouttimetoo

Billy, I'm beginning to think you have somehow cloned yourself, how else do you do busy full time job, charitable works, shopping, visiting friends and family, look into and research consultancy, plan the big house, and update on here

Unhapy shopper raises a very good point about tax and you need to look into this side of it very very carefully as well as understand everything you are allowed to offset against your tax, you'd probably be quite suprised at all the small things you can offset in order to reduce tax liablity.

Re you saying you have told you should only take out an interest only mortgage, I'm not sure whether it's just the way I'm reading it but it sounds like you might think you have a choice?

I'm far from an expert, have not done it myself for a good old while and also don't understand any differences there mya be with the Scottish legal and property situation but my understanding is that you cannot have a repayment mortgage for BTL. I can't give you a lovely technical explanation but it something to do with tax and something like could be seen to be reducing your mortage as via the rent as this technically means the tenant is reducing your mortgage so you are benefitting from it and therefore must be taxed.

That's not to say that you can't overpay the IO BTL mortgage though again you need to look into this very carefully as it may not be in your interests and you may also have some restrictions with OP's in the same way some people do when they are certain normal residential mortgages

I know you will research this properly but I would really urge you to meet with accountants.

There are also some very good threads on here about all the things you need to be aware of as a BTL landlord as well as what you can claim for etc sp have a look at the buying and renting site on here

Hope some of the above makes sense!

Secret_Saving_Squirrel

Sounds a very exciting project, I would love to own a street! So convenient for maintenance....

Squirrel

abouttimetoo

wynnvegas wrote: »

Thanks Gally,

It's maybe just my ignorance of the general populous that's led me to my half-baked conclusion. I've always questions why someone would want to pay £600p/m forever instead of buying a house and paying £600p/m until it's paid off and you don't have to worry about your biggest bill ever again. Anything that just makes no financial sense goes over my head.

In saying that, I'd let the gas be cut off before Sky Sports so I may have some sympathy on that one!

Landlord Billy, here we go!

Cheers,

Billy

Me again! I know some of the others have given you food for thought about why people choose to rent but just to add my two penneth... I used to think exactly the same as you and couldn't understand why people chose to rent. I'm not saying everyone that rents would choose to but there are many that apparently prefer it. My BIL has two BTL's, one is a large detached house and the tenant is a very high earning professional. He has been a tenant for a few years now and pays a hefty rent and was in his previous property for many years too. Apparently he just like the convenience of someone else having the hassle of purchasing and repairs etc and hates the thought of owning.

I mentioned to you I have other friends that rent and the one that has the lower end of the market has several tenants who have asked him if they can do things like replace bathrooms, kitchens, carpets, doors etc all at their own expenses. He is a very decent bloke and far from aa rip off landlord, time and time again he has asked them why they would want to do this when they rent and that they can't take the itmes with them when they move on but they insist they are happy with their rental situation and him having the other hassles if they can make it 'more their own' inside

We are all different I guess

wynnvegas

Thanks very much ATT,

Easy answer to the first bit. Remove all shopping and everything else is achievable!

I'll certainly do all the possible digging before jumping into this. I don't understand the tax implications, the vagaries of surveying and coneyancing, the myriad of necessary insurances or the overall impact of our personal and collective financial situations. If nothing else, it's enough of an excel-fest to keep me occupied for a good while.

Cheers,

Billy

abouttimetoo

Yay, more excel :j:j:j

I know it's some way off but I can recommend a decent insurer for Landlords policies, they are suprisingly hard to come by!

wynnvegas

Hi Squirrel,

I hadn't thought much past the idea of having "Billy Street" but there are doubtless many advantages to owning a nearby bank of houses. Likely a few added risks as well...

Cheers,

Billy

wynnvegas

Hi ATT,

It's one of those that I'll never understand. Having to rent is something that's easy to get (we rented for the only time in our lives whilst @ uni) but having the option to buy and still choosing not to just doesn't stack up at all. However, for those of that persuasion, they'll be plenty welcome in Billy Street.

Thanks for the continued advice. I'll come back to you on the insurance piece - busy building graphs just now!! If BTL mortgages are only available as interest only, I think I'd rapidly lose interest in the idea. I had great fun biting off big chunks off our mortgage and have already started planning mortgage freedom for #1 Billy Street (36 months at a guess thus far).

Cheers,

Billy

unhappy_shopper

Many of my expatriate friends, who earn quite high salaries, do not want the hassle of buying and later selling (losing money in situations like the current one) at throwaway prices when they leave the country in search of greener pastures. For them, renting is the most viable option.

FYI, BTL mortgages are available on interest-only, and/or capital repayment basis.

wynnvegas

Thanks US,

That's good news. I'm all for the mortgage battering. From the letting agent chat I've had, it's folk who've maxed themselves out on interest only deals and had a period of vacancy that they've not been able to cover. We've no intention of putting ourselves anywhere near that position and, with an additional demographic to target, everything is looking up again!

Cheers,

Billy