renting out rooms - interest only mortgage?

bobby_davro_2

My original question was actually looking for advice on whether to get an interest only or capital repayment option.

I'm not sold on either. jUst want to know what's best

Just felt for the first couple of years as i find my feet, the interest only option would help out.
Any extra money i had from tennants i would be able to bank away into an ISA or investment elsewhere.

clutton_2

"Extra money from tenants" - you are not likely to make much money in the first couple of years if you bring your property up to a decent standard.


how about your legal obligations and your expenses - your hundreds of obligations under the various housing acts which protect tenants from the likes of landlords who dont know what they are doing ?

what about your annual gas safety inspection certificate ? (legally compulsory)
what about having your electrics checked and certificated
what about smoke alarms ?
BTL insurance (otherwise your tenants are not covered - do you care ?)
repairs - or will you not bother ?
providing decent quality fire-proofed furniture
providing BB & SKY - everyone wants this these days
voids - when you have no tenants and yet still have to pay the mortgage
buying membership of National Landlords ASsociation (so that you know what you are doing )
court costs when you cannot get them out
buying tenancy agreements and inventories
paying to get your tenants credit checked - will you bother ?

i'm sorry if this sounds harsh - i have bought 3 houses off amateur landlords who were like you, and the state that they let their properties get into was a disgrace - they had not thought it thru, they had voids, they could not pay the mortgage after a year and so were evicted, and families put out onto the street.

this is NOT a joke of an industry it is a very serious thing you are contemplating - you will playing with peoples lives - and i for one will not collude with this "well i wont get found out nonsense"

i so agree with other posters that you do not seem to have the financial acumen to do this.

lynzpower

Does this really fall under HMO regs if the OP is living there? Or is it lodgers?

if HMO you are getting into a whole raft of problems with fire escapes, sinks in each room fire doors and loads of other expensive grief. I dont know about HMOs really, ( but learning) so would be interested in what more experienced posters think.

From a personal perspective of buying somewhere where I needed lodgers income to basically keep the property going I would urge you to think very carefully

1) you might not get them -and if you need them to pay the bills then you are up the proverbial creek
2) i took someone in that I thought was a freind and they were an absolute nightmare. She went fairly quickly, not quickly enough though.
3) you are the one having to pay for repairs, furnitire, the lot. Some lodgers can be demanding in this regard.
4) do you really want to share your home with 3 strangers? you might be used to housesharing I was, but its a very different ball game whene its your own place adn people treat the place like thier own which lets face it is what they are paying for.

If I had my time over again I wouldnt do it.

maryjane01

We have a lodger and haven't told our lender (or mortgage advisor or solicitor for that matter as with our mortgage we should not have a lodger). We did however get an insurance policy for the home and contents which allowed a lodger (a lot don't!). We would be devestated if the house burnt down and the policy was invalid because we had not declared a lodger in the property. (insurance is Halifax BTW, only insures lodgers contents upt to £500 and we told him this so he could organise extra for himself if he wanted)

clutton_2

one lodger is very different to three and a home with one lodger is not included in the HMO regs. Wisely you have insured his contents as far as you are able and have put this arrangement on a legal footing. Our original poster does not appear to want to do that.

prudryden

REF: HMO
OP should check with council. Each one seems to be different and very confusing. The councils are even confused. In some places, a property with a resident landlord and a minimum of two lodgers (unrelated) can be considered an HMO if they share facilities such as toilet etc.
I know that I have to be careful with how many stay in each of my self-contained flats. There can be no more than two households (a household can be an individual) so therefore two friends staying in a flat are considered two households. It is becoming a nightmare.
The ironic thing about this is that you can have a two bedroom self-contained flat where 4 people are living. If they are couples (male or female), then this is ok. But if you have 3 people unrelated, then you have a problem.

bobby_davro_2

So when is it a good idea to take out an interest only mortgage?

lynzpower

bobby_davro wrote:

So when is it a good idea to take out an interest only mortgage?

generally never IMHO if you are going to be living in the property

and I have got one. and speak with bitter experience.

prudryden

bobby_davro wrote:

So when is it a good idea to take out an interest only mortgage?

Generally, only if you have no other alternative but to take an interest only.