buying to let maybe?

martymcauley

Hi, I was talking to a friend recently and he enlightened me to the idea of cashing in on the equity of my house. I owe £49,000 on my pad and have 15 years to pay it off but the value is 180,000 +. the house next door , which isnt just as good as mine, went for 180,000. now he explained to me that i could remorgage the house and use the equity to buy some more houses to rent. let the rent cover the the mortgage and get the profits from the house appreciation. does anyone have any ideas about this and what all it entails. i dont want to remortgage for the whole value of the house since i couldnt afford the repayments so if i went for a 90,000 that would give me £40,000 to put down deposits maybe 2 houses. i have an idea of where i would want to buy and the average house price there is 120,000. anyone any comments on this?

BettiePage

I wouldn't do it without doing a hell of a lot more homework.How will you cover the mortgage when you have voids for example? Insurance? Wear and tear and repairs?

Why not just work extra hard on completely paying off your mortgage?

RHemmings

Do your research. People have lost money, sometimes a lot of money, by buying the wrong property at the wrong price. Some claim that the BTL market is an overinflated bubble ready to burst.

http://www.moneyweek.com/file/8658/why-the-buy-to-let-bubble-is-doomed-to-burst.html

sm9ai

martymcauley wrote:

let the rent cover the the mortgage and get the profits from the house appreciation.

If that were possible then it would be okay - but most of the time the figures simply don't add up.

roswell

martymcauley wrote:

. I owe £49,000 on my pad and have 15 years to pay it off but the value is 180,000 +. ?

martymcauley wrote:

the average house price there is 120,000. anyone any comments on this?

Do you want to know what i would do?
Id sell for £180 and buy for £120 and enjoy being mortgage free.
Put your mortgage payments into a savings account and enjoy the good life.

thesaint

What would the monthly mortgage payment be on borrowing £80k, and then what would the rental income be on the house that you are considering?

mystic_trev

This whole BTL "Investment" is becoming madness, I really can see it ending in meltdown and am convinced it's become one of the main resons for continued HPI.

I was out to dinner on Friday with 13 friends from my teenage years! We all meet up once a year for a reunion which usually ends in us all drinking far too much. Anyway during the course of our conversations I found out that two had bought BTL's in the past year. I heard the usual "It's my Pension" and well "Property ony ever goes up" I was quite amazed. These are intelligent people in there late 40's early 50's and both owned Property during the last correction, how short some people's memories are!

nrsql

>> now he explained to me that i could remorgage the house and use the equity to buy some more houses to rent. let the rent cover the the mortgage

Look at the figures and see if you still think it's a good idea. You may find a deal that's profitable and no one else has noticed.

>> and get the profits from the house appreciation.
I wouldn't rely on that. You only realise these profits or losses when you sell. Think about the rental yield. The property might appreciate or depreciate - it's your call as to which you think will happen - a lot depends on whether the purchase price is inflated.

real1314

RHemmings wrote:

Do your research. People have lost money, sometimes a lot of money, by buying the wrong property at the wrong price. Some claim that the BTL market is an overinflated bubble ready to burst.

http://www.moneyweek.com/file/8658/why-the-buy-to-let-bubble-is-doomed-to-burst.html

Hmm, is that article biased?

Well, they rubbish ARLAs use of the 20 yr average increase in prices as fantasy, whilst using anecdotal evidence of a 9% price reduction in flats over a 3 month period to produce an annual 36% loss.

I think the BTL market is hardly a national market, it can be worthwhile if the figures add up bearing in mind rent, price, potential and future affordability. Works in some areas, a disaster in others.

brainiac44

honestly - avoid like the plague.

in 2 years time you will be thankfull you sat tight as the lending bubble went crazy. people will be owing on everything. were already at double the highest ever lending level. uk wages will not sustain this. its already crumbling. record repos. record debt.

dont be the last fool to tie up to a btl mortgage as the ship keels over and sinks. put your money safe in euros and spend it slowly. be thankful you have your house.

if you meddle with buy to let right now you might be losing your OWN house, not just the investment if the economy wont sustain a 40% inflation level in housing.

the time to invest in buy to let has passed. (1996-1999)
never try it at the very peak of a bubble.

all your doing is taking on a LOAN with MASSIVE risk.
rents have barely risen since 2001 due to buy to let over supply.
your simply too late dude !!

dont be a victim.