Buying a second home....

BarryBear83

Listerbelle wrote: »

Does your current lender not simply allow you to rent out your current property by paying for a "consent to let" application?

The bank charge for one of my rentals - which was previously my home - is 150 quid a year. No change in mortgage rate.

Thank you!!!!!!!!!!!!!!!!!!!!!!!!! Consent to let is what we've been after all this time!!!!! Finally we've got somewhere!

Much appreciated!!:j

Yorkie1

A suggestion to seek consent to let was mentioned in the second reply to your post. Did you not spot it?

jonewer

Maybe the council should pay your mortgage for you?

Thrugelmir

BarryBear83 wrote: »

Basically disposable income wise we're laughing but negative equity is the main issue - and we aint paying £10k just to sell our house. We earn enough to cover two mortgages comfortably so why would we!!

Negative equity is a fact of life. As yes, house prices do fall. Though its an alien concept to a whole generation. Might as well just pay the negative debt off. As paying interest and incurring costs on an empty property is of no benefit.

Letting a property exposes you to all the risks of running a business.

You are falling into the trap that many investor do. Holding onto a bad investment in the hope that the market will recover your losses. Rather than biting the bullet and taking the hit. Then moving on.

Cissi

BarryBear83 wrote: »

Why? We bought in the boom on a high fixed rate, mortgage dropped by 33% after 2 years and our income has doubled in the mean time.

Basically disposable income wise we're laughing but negative equity is the main issue - and we aint paying £10k just to sell our house. We earn enough to cover two mortgages comfortably so why would we!!

So let me get this straight: you could comfortably afford to cover the negative equity and move on, but you would rather continue to lose further money by paying a mortgage on a house in negative equity that you won't be living in and may not be able to rent out? Why? With 100% certainty you'll end up throwing away a lot more than £10k on this, especially if you follow your initial plan of leaving the house empty. And you may not be able to get consent to let either since you're in negative equity.

Have you calculated the total interest payments that you'll owe over the remainder of the mortgage? I bet they're more than £10k...

Why not look at it this way instead: the house that you bought in the boom has lost value (and is unlikely to recover this value anytime soon, it may take decades or more) - but then, so has the new house that you will buy. So overall those £10k that you'll have to pay your bank in order to move haven't been "lost" as your new house is also a lot cheaper than it would have been in the boom.

I really feel for people who are stuck in negative equity and unable to move as they can't raise the cash, but to do this by choice when you could afford to get out just - baffles me. I wish basic financial education was compulsory in schools...

CLAPTON

currently you are paying 500 per month on the mortgage so that's 6k per annum
add your council tax and property insurance and within 18months you will have paid out 10k

so you might just a well take the 10k hit on the property by selling it now, as after the 18 months you will be in profit
and then buy the house you really want

dotchas

Cissi wrote: »

Why not look at it this way instead: the house that you bought in the boom has lost value (and is unlikely to recover this value anytime soon, it may take decades or more) - but then, so has the new house that you will buy. So overall those £10k that you'll have to pay your bank in order to move haven't been "lost" as your new house is also a lot cheaper than it would have been in the boom.

Cissi makes a very good point.
You need to concentrate on moving forward and stop stewing about being in negative equity. You have plenty disposable income,use it to move and get rid of what is a millstone around your neck. You are lucky you can afford it , many can't.

BarryBear83

Cissi wrote: »

So let me get this straight: you could comfortably afford to cover the negative equity and move on, but you would rather continue to lose further money by paying a mortgage on a house in negative equity that you won't be living in and may not be able to rent out? Why? With 100% certainty you'll end up throwing away a lot more than £10k on this, especially if you follow your initial plan of leaving the house empty. And you may not be able to get consent to let either since you're in negative equity.

Have you calculated the total interest payments that you'll owe over the remainder of the mortgage? I bet they're more than £10k...

Why not look at it this way instead: the house that you bought in the boom has lost value (and is unlikely to recover this value anytime soon, it may take decades or more) - but then, so has the new house that you will buy. So overall those £10k that you'll have to pay your bank in order to move haven't been "lost" as your new house is also a lot cheaper than it would have been in the boom.

I really feel for people who are stuck in negative equity and unable to move as they can't raise the cash, but to do this by choice when you could afford to get out just - baffles me. I wish basic financial education was compulsory in schools...

We cant comfortably cover our negative equity as in pay £10k now and walk away no worries. If I pay the £10k to sell it now then I'll need to save up £30k for a £20k deposit on a new house and basically I think the main issue is I cant be bothered to wait to save up an additional £10k.

If I continue to pay £500 a month mortgage in a few years It'll be in (positive) equity and at the end of it I'll own that house (nice little pension pot when sell it on retirment).
I know in the long run I'll have paid a hell of a lot more than £10k in interest but I'll have a house to show for it....

P.S - LMFAO at the basic financial education!! I suppose I should go and get my GCSE's, A-Level's (including Accounting and Business), Degree and my ACCA membership all remarked then!!

BarryBear83

CLAPTON wrote: »

currently you are paying 500 per month on the mortgage so that's 6k per annum
add your council tax and property insurance and within 18months you will have paid out 10k

so you might just a well take the 10k hit on the property by selling it now, as after the 18 months you will be in profit
and then buy the house you really want

You're only the second person to make a sensible comment! When you put it like that (paying £6k a year) then it does look the best option to wait but my issue is why fork out a £10k lump sum now when I can just bite the bullet, accept its in negative equity, and continue to pay its mortgage for the forseeable future with the end result being a property owned outright that we can sell pre-retirement?

Thanks again though

Thrugelmir

BarryBear83 wrote: »

If I continue to pay £500 a month mortgage in a few years It'll be in (positive) equity and at the end of it I'll own that house (nice little pension pot when sell it on retirment).

There's a small matter of tax to consider. Which diminishes the return somewhat. Will the rent generate sufficient after tax profit (cash) to repay the capital?