Lulabelle's MFW Diary

lulabelle1

wynnvegas wrote: »

Hi Lulabelle,

Outstanding. Fingers crossed for you. I'm waiting on my first three options coming through tonight. Happy landlordying...

Cheers,

Billy

Hi Billy, thanks for your good wishes
Best of luck with your new ventures too!
How was the plot of land? Did you both fall in love with it...?

Best, L

lulabelle1

Ok, a little update....

My offer has been accepted, I now have 28 days in which to exchange, eeeeek!!!!

So, I need to get my mortgage app submitted tomorrow and get the ball moving. I've been plugging away at spreadsheets tomorrow and have decided which mortgage to go for. Still in 2 minds about whether to go for interest only or repayment. "Think" that I have decided to start with interest only for the short term with the plan to start making capital repayments somewhere down the line.

My main priority is still that I want to pay off the the mortgage for our home first. The B2L will need to follow.

So, have crunched all the numbers and thanks to a little bit in my savings pot, it looks like I will only need to draw back £13,500 of my o/p's, thus leaving me with just short of £9,000 in o/p's in my own house.

I will need to calculate how this affects my 7 year MF plan and work out how much more money I will need to find/OP in order to stay on track but to be perfectly honest, my brain hurts and I can't think about it anymore, so off for a nice glass of wine with the intent what I can unwind a little bit.

Managed to pull in a new contract for work today too, so it's been a busy one!!!!

I hope I can sleep, but I fear I will be waking up in the nice worrying about whether the whole thing is a good idea or now.

lulabelle1

Sorry about the typo's, too much typing and number crunching today, can no longer see straight!

Tilly_MFW_in_6_YRS

Great news and good luck. T

lulabelle1

Thanks Tilly x

lulabelle1

DH is off to see the property this morning. So far the little journey has been made by myself, so thought it wise for him to go and inspect it before I submit my mortgage app later today and start spending money on my little venture!

off in to London today for meetings so its going to be a busy one again...

Oh, and we're still being very good on the money saving side, haven't spent anything all week, erm, well, apart from a new property potentially!

Best, L

Daryl_S_2

Good luck.
We had to spend a bit when we switched our old house to LtB, but many of the costs are deemed allowable expenses and therefore tax deductable

lulabelle1

Thanks Daryl
The whole thing is a bit scary, I'm nervous about taking back such a large chunk of my repayments to fund the deposit, the it's one of those things where if I never try, I'll never know and it will bug me for the rest of my days!!
I've got spreadsheets coming out of my ears so will make sure that I log everything down and keep a good track of it all for when I do my self assessment.
Hope everything is going well with you....

Best, L

wynnvegas

Hi L,

Would you be willing to share some advice from your myriad of spreadsheets? I'm trying to ensure that I'm not missing out much in the way of the expenditure involved.

Upfront costs I've taken into account are the deposit, arrangement fee, conveyancing fee, survey fee, property finder fee, stamp duty and the immediately required necessary improvements.

Ongoing costs I've so far taken account of are interest on the squalor offset, the BTL mortgage, letting agent fees, insurances (buildings / contents / public liability / rental / emergency repair) and any repairs / replacements / landlordy duty things like gas certificates and the like that become necessary.

Have I missed anything in particular?

Cheers,

Billy

lulabelle1

Hi Bily

I think you have it all covered. The only thing possibly missing is a booking/application fee for the mortgage. This is different to the arrangement fee and is payable at the point that you submit the mortgage application.

After a very sleepless night and much consideration I've decided to postpone my b2l pans for the short term.....

I was a little bit worried as the flat I've had an offer accepted on is a repo. Basically, I could pay out all of the fees upfront but still lose the property right up until day of exchange. So, this made me nervous, I like to be in control.

Next, I would need to take back most of the o/p tha I have built up in my own home. By the time I take in to account the mortgage payment, ground rent, arrangement fee etc etc, I would be clearing around 60 per month, but this assumed that the property has no periods of being empty, that I achieve the level of rent that they had advised me and that interest rates remain at a low level.

If I look at the money that I would take from my o/p to fund, and the fact that it would be taken from the part of my mortgage that is on a fix of 5.63%, then the extra interest that I would be paying far outstrips the potential 60 that I could clear per month on the b2l.

I never planned for the b2l to make money each month but I was looking at the potential of the property being worth more in say 20 years. I'm confident it would be but since the economy is in such a mess today and it's unlikely to improve any time soon, I'm not confident that the house prices will not drop further.

So, I'm thinking that I might be better to wait a couple of years and when things start to stabilise, chose the right time to make my first b2l investment. In the meantime I will tighten my belt and o/p as much as I can. I really want to reduce my mortgage as much as possible. Since I have 2 small children, I want to be as comfortable as possible in regards to having a low mortgage before I start making some calculated property investments.

Plus, i am self employed, I own part of a small business. We're doing well but we've only really been doing it for a couple of years and have a long way to go before we're where we need to be in terms of building up long term plans/security etc etc.

So, I'm a bit disappointed but I think it's the right thing to do in the short term. Hopefully I will revisit the idea in a couple of years before house prices increase too much.....

In the mean time, I will be on here focusing on my MF dreams and scrimping and saving for hopefully a rosey future.

Best, L