Second Property

dopester

lockem wrote: »

Thanks for everyones comments - some good feedback. Are there any mortgages or ways of getting a BTL without having to stump up a large(ish) deposit?

Depends on what you consider a large deposit, and the price of the BTL you're looking to buy.

You might want to open your eyes the lenders are not just kissing people like you with 100% mortgages any more, just because you near own a property outright.

Consider the flip side, and factor in the reverse of Thrug's capital appreciation make-believe it a good investment.... and do your research for the prospects of the economy and area you plan to buy in.

A chunk of the population in a place down Devon way are surviving on donated food parcels. Many areas in serious transition.

Also factor in there are monsters out there, like me, who are waiting in the shadows with a lot of money in reserve, to pounce, and rip apart those who were formerly secure but had risked their position - should house prices / economy falter. To buy at price levels wholly cheaper than current market prices. No mercy if your BTL goes to pieces and lenders want to call in what they are owed from your main home. Don't blame anyone but yourself if you end up being 47 years old, having lost your BTL, your main home, and forced to rent from some far superior intelligent landlord, providing an extra income and pension for someone else.

00ec25

so a standard 25 year mortgage term will take you to early 60's, so you are reasonably timed. Your business plan is to have the rental income pay off the capital value of the property (mortgage) and also to cover all running expenses (including income tax) during the life of the property, ie the fundamental BTL model

in your case CGT is irrelevant since your aim is to sell a house which cost £x and it is £x which is your investment nest egg target. Any growth in value above x is a bonus, so if you incur CGT as a consequence of growth then you have the money to pay the tax from the extra proceeds of the sale anyway. Conversely if the property depreciates you have a useful CGT loss to offset against gains on other asset classes

However only you can put real figures against this to see if it will work in real terms. Clearly the rent must be set at a level to cover all running costs incl mortgage so your attitude at the moment is of concern "I don't want a huge return on the rent income" as it suggests someone who has no idea of the figures yet. Only you know your location's rental market levels against the value of property you can purchase by remortgaging your house based on your existing income multiple. Obviously by not going the BTL mortgage route, the mortgage affordability is the normal salary linked model.

If you end up subsidising the mortgage (or void periods) with your spare residual income then obviously this is a reduction in your return on your investment and offers a straight comparison with other asset classes investment opportunities for that residual money

personally I have 2 properties and (a similar amount of) money in other asset classes. Do not let the tax tail wag the business model head