Any other home buyers in NI?

saverbuyer

bingobangobongo wrote: »

Interesting...we are not in a 'product', our mortgage product ended 4 years ago and we have been tracking the base rate paying 2.5%.

I'm not sure what they would do in our situation, might be best to talk to them. Sounds like they would try and force us onto a BTL mortgage but yet we wouldn't meet the criteria to get one.

Rock and a hard place.

Sounds like it.

Either rent it out and don't tell them (fraud) or tell them and pay more for their increased risk.

Best bet is to over pay and reduce your debt.

Can you afford both mortages at 7%?

saverbuyer

saverbuyer wrote: »

Sounds like it.

Either rent it out and don't tell them (fraud) or tell them and pay more for their increased risk.

Best bet is to over pay and reduce your debt.

Can you afford both mortages at 7%?

P.S. You are on Nationwides old SVR. They will try their best to get you off it.

You're costing them money.

bingobangobongo

saverbuyer wrote: »

Sounds like it.

Either rent it out and don't tell them (fraud) or tell them and pay more for their increased risk.

Best bet is to over pay and reduce your debt.

Can you afford both mortages at 7%?

At 7% we can just about cover both mortgages on top of our regular monthly outgoings. We wouldn't be saving anything though and would have to watch what we spent.

saverbuyer

bingobangobongo wrote: »

At 7% we can just about cover both mortgages on top of our regular monthly outgoings. We wouldn't be saving anything though and would have to watch what we spent.

What I would do is overpay. 2.5% is a fantastic rate.

I wouldn't look to take on more debt.

I see you’ve asked the question on the boards before and the vast majority agree. Pay your debt down and then move. It won't take long.

GlynD

saverbuyer wrote: »

What I would do is overpay. 2.5% is a fantastic rate.

I wouldn't look to take on more debt.

I see you’ve asked the question on the boards before and the vast majority agree. Pay your debt down and then move. It won't take long.

I did that in GB. To be honest you really need to hit the debt hard to take a good bite out of it. I made the mistake of only taking off £100 a month because I thought I'd be in the mortgage long-term. As it happened I was wrong.

qwert_yuiop

Motor guy - Given your difficult position I'd say you're probably doing the right thing. Although there is the possibility (probability?) that the value never comes back to what it was.

bingobangobongo

Save save save.

saverbuyer

motorguy wrote: »

No. Again this is wrong. The asset has quite a high positive value, the liability against it - the mortgage - means that overall i was exposed to the tune of £40,000. I have worked to reduce this to approx £20,000 or less, and it is heading towards zero or +VE.

Many people, other than us argue over a house being an asset or liability. Housing is pretty unique in that from the moment you purchase it, it is degrading. You have to pay maintenance just to keep it standing; you have no choice over this. You also have to pay tax just to have use of it. Stop paying rates and see who it belongs to. This is pretty unique. I buy a bar of gold, a diamond or a share and I have an asset. It’s mine; I don’t have to do anything else. There are no on-going costs, no liabilities.
A house is a liability, it is an on-going cost you have no control over. You have to pay it. Forget about the mortgage, I could have bought cash. Over time the value of the house could approach zero, without maintenance, or be negative. I could have to pay someone to take it off my hands, as happens with commercial property with high rates.

It wasnt about putting eggs anywhere. It was about nullifying the risk and the exposure. Which he have done.

Overall we have quite a low LTV on the new house, so if we had to 'liquidate our assets', we'd be in quite a healthy position. I guess then we could rent?

Again, I'll say, OK. Your choice was to become a landlord. As I said in a previous post, the only way it works is with capital growth. Looking at your figures, £600 a month rent, after costs and tax you'll have to put your own money to it, or look for capital growth to remove the negative equity. Looking at 4% interest you would need 7,800 just to break even before costs and tax.

It was my recollection that the crash happened in 2008

http://www.marketoracle.co.uk/Article5563.html

However thats neither here nor there. Commitments were made to build the house that we were happy to go through with (the site for example). I dont think anyone could have predicted how bad it was going to be, and certainly we took evasive action when we had to. Ideally we would have been able to sell, but 'plan b' was always to rent.

Prices dropped 5% in September 2007. I also think lots of people seen it coming. Many would have held off taking on another large debt, while in negative equity, though I admit it's easy with hindsight. As I said, I would have held off and paid the mortgage down and not build. But then if plan B was always to become a landlord, the decision was already made. I would have held off buying a site and saved lots money, but it’s easy with hindsight.

As i said, we're not selling so its irrespective. Once the mortgage is cleared - or the next time the house is vacant - we'll take professional advice and review our options.

Good .

You dont seem to be getting it. It was an evasive course of action based on events at the time. It is NOT an investment option for us. We already have pensions, ISA's, savings, etc for investments. What we have done is merely a holding pattern until the situation improves.

Evasive and avoidable. As I said, looking at your figures, after costs, maintenance and taxes, I wouldn't want to be topping up the mortgage waiting on capital growth. I think you said you had pervious bad tenants. I couldn't be bothered with the hassle. 5-25 years of property letting isn't my thing. I would be stressed. It's not worth it for me.

Everyones house dropped in value. We're still well clear on the new house so we are not concerned about it.

Most did, but not everyone has a mortgage and needs to worry about it.

Theres nothing to it. Money comes in, mortgage gets paid, repeat.

I thought you had difficult tenants before, must have picked you up wrong.

There are obligations I don't need. Tax needs paid, rates need paid even when vacant, I could get a phone call in bad weather with a burst pipe, tenants could start a weed farm and I don't need the stress.

Again, you missed my point. We had probably £40,000 of exposure at the time which is the difference between the mortgage owed and how much we'd have had to "let it go" at for a quick sale. We opted not to do that.

We've been paying £7,200 a year off the mortgage (via the rental income) since then, so thats £28,400. I'd say based on even -30% RV (which would be a giveaway) the house is still worth maybe £90,000. Even if we have only paid another £10,000 off the loan amount (with the rest being interest) then you can clearly see we're approx £20K better off than we were 4 years ago.

Therefore for minimal effort we have reduced our exposure by £20,000, or £5000 a year. Definitely seems worth it, wouldnt you agree?

I'm not missing anything, I get it. You're not unique, I know many more like you. I'm saying, I would have sold as early as possible and not chased the market down. I couldn't be bothered with letting and the problems attached.

I can't see how you would pay anywhere close to 20k off, 10k at a push and that's with topping it up with your own cash.

Do you pay tax on the noninterest part of the mortgage?

Is it consent to let? It can't be BTL as you have no equity. Are you stuck with your existing lender?

I can get why you've done what you have. You have used your effort and labour over the last 5 years, which has a value, to reduce your debt by 20k. Grand. I would have used my labour and effort to recoup the 20-40k of negative equity I would have had to pay when I sold the place because I'd like to think I could make more doing something else rather than letting property.

saverbuyer

motorguy wrote: »

Oh aye, we did initially. Lovely people in the house now though. :eek:

And so it's not for me.

Tell us your mortgage rate and it's easy to work out how much this "asset" is costing or making you.

saverbuyer

motorguy wrote: »

we'd rather have a tennant do that for us.

OK Paul, if you say so.

I'm sure you are making lots of money and paying off your debt.

100%+ LTV and £600 a month rent?

I'd probably speak to someone with a bit of GCSE maths experience sooner rather than later. Can't see how on those figures you "have a tenant do that for us", but obviously you don't want to give out "personal financial details" on a forum. Wouldn't want some Nigerian to skim your bank account using your mortgage rate. :rotfl:

Anyway, you told us this situation works for you with “miniscule effort” and have forgotten about those problem tenants from before.

Well done. I'm waiting for the book to be published. Bought in 2003 in Craigavon and built in 2009 after having bought a site. Some financial wizardry right there. Best seller material.