85% buy to let mortgages return.

Conrad

de1amo wrote: »

i know landlords look at yields of rent but i cant understand the concept of buying an investment that is devaluing faster than the rent comes in!--if the banks saw property as a safe investment they wouldnt be so 'tough' on lending criterior.

Well firstly we don't see prices dropping in good locations, and even if they do it's just temporary, compared with the long term nature of the investment, so utterly meaningless.

Secondly rent yields can be really decent now, espcialy compared with low mortgage rates (and yes we realise rates will rise).

Thirdly the Banks send costly reps to glean business out of me (a broker) - they most certainly do want to lend but overall FSA regulation to include the capital ratio rules, make lending difficult.

de1amo

this making it difficult to capitalise the deals to make the market will impact demand thus causing the prices fall--there is no demand from FTBs so long term it looks a poor investment--prices will go up eventually but for the risk and exposure there are better options out there--i have a second property that i might let out but there are so many horror stories out there that it is off putting to becoming a landlord--any spare funds i have goes into gold which is painless and provides good shelter!

Vincenzo

de1amo wrote: »

this making it difficult to capitalise the deals to make the market will impact demand thus causing the prices fall--there is no demand from FTBs so long term it looks a poor investment--prices will go up eventually but for the risk and exposure there are better options out there--i have a second property that i might let out but there are so many horror stories out there that it is off putting to becoming a landlord--any spare funds i have goes into gold which is painless and provides good shelter!

Each to their own. I personally don't like gold. What an odd asset that appreciates in value because nobody knows what else to buy! Its price is far too reliant on sentiment for my liking.

At least property serves a purpose in providing shelter, something that people will always need.

de1amo

i have property, gold, cash and business(outside the eurozone)-gold is a spare cash thing to shelter from inflation and according to the banks who have been buying the market in it they value it higher than their own currencies--gold has always been a world currency i can buy it anywhere in the world and sell it elsewhere without prejudice.
i have been a landlord before and know the pitfalls--i sold out near the top in 2007 as i saw the market 'done'

abaxas

Conrad wrote: »

Well firstly we don't see prices dropping in good locations, and even if they do it's just temporary, compared with the long term nature of the investment, so utterly meaningless.

Secondly rent yields can be really decent now, espcialy compared with low mortgage rates (and yes we realise rates will rise).

Thirdly the Banks send costly reps to glean business out of me (a broker) - they most certainly do want to lend but overall FSA regulation to include the capital ratio rules, make lending difficult.

I think you'll find that the best locations are the ones with the largest drops.

In any recession there is normally a flight to average.

Scots

IveSeenTheLight wrote: »

So you either work and earn less than £20k or you don't work at all.
You have £60k available and want to put it towards a £120k BTL.

Which area do you want to buy in?
Is it a 1 or 2 bed property?
What's the market rent for that type of property in that area?
What Rental Yield would you expect to receive?
I'm guessing the rent would meet the 125% mortgage interest criteria.
I'm guessing their including an income criteria to allow for coverage of voids / maintenance etc
Have you explored the option with the lenders of only putting down a 40% deposit and utilising the £12k as a back up to cover voids / maintenance etc.
If the property is in Scotland (going by your user name) are you aware that you would have to register as a landlord with the government.
Are you aware of the finances regarding the BTL i.e. how much can be offset before the income is taxed?

Just a few things to consider.

[edit] P.S. just recalled you already have a BTL. I take it you have included this in your business plan [/edit]

Thanks for trying to help out.

I do work but I have several part time jobs none of which I could honestly say can guarantee a certain level of income. One job is casual, I'm employed but only when required which could be a lot or it could be less. Another is an employed job but is only temporary cover till the guy comes back off sick. Another job is commission based, part time, and doesn't earn much anyway. And sometimes I do self employed jobs for people, so again I can't produce evidence.
So I work quite a lot, but don't earn much, and would be difficult to prove or rely on.

I do already have a btl which has 80k mortgage outstanding. When I got that from bank of Scotland about 5 years ago I don't remember being asked about income, I seem to think it was all based on the rental. I might be wrong.

It just seemed unreasonable of the bank to want such a high income level for what is a relatively small loan and 50% of asking price. What is their thinking about that. It sounds like they are expecting a lot of defaulting to take place which in itself does not boost anyones confidence in the market.

I have not investigated the option you speak of, but tbh I've gone off the idea of a new mortagage anyway, what with their high fees and high interest. I'm looking at other ways of raising the cash.

I'm already registered as a landlord, the property is in same block as the one I have and I know it is good for renting and would get around £500 a month. Voids have been very low over past 5 years. Only happened because I let the bathroom get grubby. Once that was sorted it flew off the shelf.

When you talk about the finances and offsets, I'm assuming you mean taking off the cost of loans from the rent.

The cost of the property is £120k
I could scrape up maybe £80k in cash
I have shares I could sell maybe raise £20k
and I have a NR rock mortagage on my own house which I paid down but left a few pounds in to keep it open, which they tell me means I could take back up to £20k.

Doing it this way means no set up fees, no high interest, buy it outright. But means having all eggs in one basket, no liquidity, no cash. Is it worth it I ask ? Whats the point ? Should I not just buy more shares ?

One other thing is I have 2 endowment policies due to mature in 2014, which despite poor performance will still come up with around £30k. I was wondering if these could be used to support a loan ?

IveSeenTheLight

Scots wrote: »

Thanks for trying to help out.

First thing I would try is setting up a meeting with the bank manager.
You have a portfolio which you can show details of your business, profits, voids etc and that as it's in the same location, you can directly compare against.
I also have personally seen extremely low voids (16 days total from two properties in the last 4 + years)

The benefit of speaking to the manager is that they can take into account your experience, record and that you are planning a 50% deposit (probably not the norm for the BTL)

I cannot comment on your query on whether you sould buy more shares or not. That's a personal choice.
I got my fingers burned before with shares and now I', naturally wary of them.
However it's not ideal to place all your eggs in one basket.

I agree, the BTL arrangement fees etc are extortionate at the moment, however at 1.5% of £60k, it would be only £900, so not too bad.
You mentioned you could withdraw £20k from your current mortgage, but that is still not enough (assuming your not taking your other eggs to support), but I wonder, could you remortgage to obtain the full £60k you need.

Certainly, private mortgage products are better than BTL products.
You'd also benefit in essence from being able to offset the full amount of your home mortgage against tax. At the moment, your not seeing any benefit in your home mortgage interest.