Buy to Let with Equity from Home

dunstonh

When investing, you should invest in many different areas. A mortgaged buy to let is a high risk transaction. Your other savings/investments are at the complete opposite end of the scale with nothing in between.

If you have the bulk of your money in UK residential Property and a crash occurs then you will be affected massively. If you have diversified to include stockmarkets (from around the world), property (UK commercial, European and Global) as well as bonds and specialist areas then you are never exposed to just one class.

Personally, I am limiting my Property exposure currently to UK commercial property (bricks and mortar) funds, European real estate funds and global property REIT funds. I wouldnt consider a UK mortgaged buy to let due to low rental yields and low potential returns for the level of risk taken.

TepidWater

Useful stuff again Ginger - many thanks. The stipulations you mention apply to my current mortgage poduct. I'm looking at another product which will allow much higher levels of overpayment.

Thanks Richard. This is certainly not a decision we are taking lightly and the comments from people on this board are shaping our approach. I also agree that interest rates are on the way up. The property we're looking at is in a area which is soon to be developed. Large scale local government investment in the area is rapidly improving the local environment. New roads, new school, new community centre, etc. Although, as you quite rightly say, nothing is certain.

Dunston - I've read your posts for a long time and they've always made sense so many thanks for offering your comments. Diversified investment makes a lot of sense and, deep down, my head is telling me that this is the best option.

Bottom line guys. Buy or don't buy?

prudryden

dunstonh wrote:

When investing, you should invest in many different areas. A mortgaged buy to let is a high risk transaction. Your other savings/investments are at the complete opposite end of the scale with nothing in between.

If you have the bulk of your money in UK residential Property and a crash occurs then you will be affected massively. If you have diversified to include stockmarkets (from around the world), property (UK commercial, European and Global) as well as bonds and specialist areas then you are never exposed to just one class.

Personally, I am limiting my Property exposure currently to UK commercial property (bricks and mortar) funds, European real estate funds and global property REIT funds. I wouldnt consider a UK mortgaged buy to let due to low rental yields and low potential returns for the level of risk taken.

Good advice. Second it.

roswell

My Opinion, dont buy - pay off what you can or invest somewhere else.

mystic_trev

when I purchased my two (for cash) ten years ago, I bought them for yield as part of my investment portfolio, with the thought of the cap app being double over 25 years. They've now nearly trebled in value which is an obvious bonus! From a personal point of view, I wouldn't buy at the moment. My two now yield just over 3% (originally nearly 10%) the figs just don't add up.With Interest rates now rising, things aint looking good for those now entering the BTL market.

mrsS_2

I would gree with earlier posters- you have too much property in your investment portfolio.

It is easy to think that buy to let is the thing at the moment- but prices are not going to rise once the interest rates start climbing- well not for a few years anyway.

I would make sure you have at LEAST 6 months salary stashed away in cash even if you have a secure job for emegencies and would not consider any sort of investment until this was achieved.

Having had a disastrous birth myself which resulted in me not being able to work for 4 years (several operations involved) I would not assume that life will carry on as now. If you HAVE to invest in property you would be better off with some sort of property bond which is more diversified.

sorry to be so negative....

TepidWater

Thanks Trev and MrsS.

Another two excellent bits of advice. The advice re. six months salary saved is one that I've had from my father (who's coincidentally done very well out of investments). The cash ISA I'm running would take approx 8 years to reach that goal! I suppose I need to up my contributions.

I'm sorry to hear about the problems you had MrsS. This is something I hadn't considered (posting through those darn rose tinted spectacles again). I certainly don't think you're being negative. I want to make an informed decision and I'd genuinely like to hear as many pieces of advice as possible.

From reading what people have posted today (and my other limited research), I'm now leaning towards other forms of investment.

Consequently, if we decide not to buy, what advice would everyone give us regarding the two remaining mortgages? I'm thinking of going for the lowest rate fixed rate deal (possibly 3 to 5 years)? In the past, I've only ever had variable rate mortgages.

Doozergirl

TepidWater wrote:

Bottom line guys. Buy or don't buy?

Don't buy.

I 'third' dunstonh's comments. :cool:

mrsS_2

As interest rates are going up next month-I think they will keep on going for a while upwards as well.

Given that you are going to have a new addition to the family and your partner MAY not want to go back to work (believe me doing a full time job on 2 hours sleep at night when the baby is 10 weeks old is not beneficial to the mothers health)- I would get the best fix I could for the next 5 years

you never know-you may not stop at one- and the next lot could be twins................

sukey13

Buy, buy, buy

...but then I am biased - as we now have 13 buy to lets (must update my profile).

Just look at the Wilsons for inspiration, they are now in the rich list with over 500 properties in Kent.

Other inspirational reads are Angela's Way (another UK property investor), Russ Whitney's Rags to Riches through real estate, Dolf De Roos "52 houses in 52 weeks"...

If you haven't read it already read "Rich Dad Poor Dad".

Property is an asset which will go up in value. Rich people own assets, their money makes them more money.

When my mum and dad bought their house it cost them £44,500 (a lot of money back then) in 1981. Now its worth about £300K, 25 years later. Imagine if they had bought 10 or more properties back then, rented them out then sold them around about now.