Buying a 2nd house to rent out

Altern8

Hi

I might be looking into buying a 2nd house to rent out i got one mortage on the house i live in but whats the best options if i wanted a 2nd mortage on the new house?

Im going to try and see a mortage adviser on saturday.


Cheers

ollyshaw

I think there are two opinions on these forums

1) BTL is a bad idea at the min

2) BTL is a bad idea at the min, unless you really know what you are doing

Olly

sambessey

As long as you take the rental yeilds vs mortgage payments into consideration and could afford a rise of 3-4% in interest rates and periods of non- occupancy, and you're feeling bullish about the housing market (which many people aren't)...

PoorDave

See your mortgage advisor, and make sure you're assessment of whether you're going to make or lose money on this is cautious.

Will the rent cover the mortgage payments?

silvercar

if you want to do it (and I did recently), you need a buy -to-let mortgage on the new property. Interest only is common as all your mortgage payments are tax deductable. Lenders like the rent to outstrip the mortgage payments by 25% and you to have a 15% deposit.

If you don't have a deposit you could consider increasing the mortgage on your home to fund the deposit.

As the adverts say, your home is at risk if you fail to keep up with your mortgage payments.......

clutton_2

before choosing an area to buy a house in, put adverts in the local papers to see if there is any tenant demand - if you get no replies after 2/3 adverts, go look elsewhere for a property.

PoorDave

clutton wrote:

before choosing an area to buy a house in, put adverts in the local papers to see if there is any tenant demand - if you get no replies after 2/3 adverts, go look elsewhere for a property.

"Hi, i'm calling about the house you have to let. I saw your ad in the local paper"

"The one i havne't bought yet, yes?"

"Is it still available?"

"Erm...no, it's gone i'm afraid"

Confusing!

clutton_2

its called market research or due diligence - i would rather waste a few quid on adverts than buy a house i cannot rent.

LizEstelle

Altern8 wrote:

Hi

I might be looking into buying a 2nd house to rent out i got one mortage on the house i live in but whats the best options if i wanted a 2nd mortage on the new house?

Im going to try and see a mortage adviser on saturday.


Cheers

One possibility is simply to remortgage at the next opportunity for a figure high enough to include the purchase of the second house.

Needless to say, this normally implies that the total should not come to more than 100% of the value of your main property, so it all depends on your current circumstances.

real1314

PoorDave wrote:

"Hi, i'm calling about the house you have to let. I saw your ad in the local paper"

"The one i havne't bought yet, yes?"

"Is it still available?"

"Erm...no, it's gone i'm afraid"

Confusing!

OR:-

Caller: "Hi I'm calling about the house you have to rent, what street is it on / Is it furnished / what's the rent / what's the deposit?"

OP: "Erm - Main street, No, £450 a month, £450, are you interested?"

Caller: "No, I'm trying to rent out a house 2 streets away and I was just checking the competiton."


Just 'cos you get phone calls doesn't mean they are from potential tenants.

Suss the area out thoroughly: Are there lots of houses to rent, are they still on the market after 3 months, how much are they asking, is there a lot of council / HA property available locally, what price will you pay, what renmt can you get, how long do you see yourself keeping the property?
Can you face losing £5000 in fees and mortgage if you had to pull out within 6 months because you couldn't get a tenant?

Like anything than can be profitable, there's a risk involved. Think of the worst case scenario and if that deosn't put you off, then give it a go.
I'd advise looking at 10 yrs as a minimum investment period though. Can you afford to be tied to the property that long?

noyk

If your getting the idea by now that it's not a particularily good investment anymore. You would be correct.