Struggling to wrap my head around Buy to Let

Gaaraz

Very interesting, thank you! I've got so much to think about before plunging into this.

SuzieSue

Js_Other_Half wrote: »

As far as I understand it most buy to let mortgages are repayment only. This means you are relying on the house price on being worth more when it is eventually sold. The interest only repayments are much less than repayment.

Get Martin's guide to Mortgages?

OP, I think that you might be getting confused by the above.

There are two main types of BTL mortgages:

Interest Only and Repayment.

With interest only, you can set off your whole mortgage payment against your rental income.

With a repayment mortgage, your mortgage payment is divided between repaying part of the capital you have borrowed and the interest element. You can only set off the interest element of your mortgage payment again your rental income.

vectistim

All mine are on repayment - that means that my LTV is now down to around a third. Doubtless I could have bought more sticking with interest only and leveraging everything as much as possible but that is a much riskier strategy.

layfs

I also understand that if it is just one property you have and the rental income is less than 10k per year and earning no additional money you do not need to declare it and only are due capital gains tax if it is rented for over three years.

jennifernil

I have never heard that, do you have a link to where it says that?

kingstreet

Js_Other_Half wrote: »

As far as I understand it most buy to let mortgages are repayment only

Not true. Interest-only dominates the BTL market.

dotchas

layfs wrote: »

I also understand that if it is just one property you have and the rental income is less than 10k per year and earning no additional money you do not need to declare it and only are due capital gains tax if it is rented for over three years.

Really? Where did you read that?

00ec25

layfs wrote: »

I also understand that if it is just one property you have and the rental income is less than 10k per year and earning no additional money you do not need to declare it

this is dangerously wrong rubbish and could result in a very costly lesson paying penalties to HMRC

you are required to declare even £1 of rent let alone £9,999 of rent

you seem to be confusing the fact that if your total income (including net PROFIT from any rental business) is less than your personal allowance then, and only then, would you have no tax to pay. This has nothing to do with rental income, its simply a factor of whether you are above the personal tax free allowance of £9,205 (NOT £10k) or not

layfs wrote: »

and only are due capital gains tax if it is rented for over three years.

this suggests you spend a lot of time repeating half truths without actually understanding anything yourself. This is ONLY true if you have lived in the property as your MAIN OR ONLY home, if you have never lived in it as a home then is again a load of codswallop

geoffky

Good luck..You are going to need it.. Being a landlord is one of the hardest ways to make a small amount of money i know of..

Thrugelmir

Gaaraz wrote: »

Very interesting, thank you! I've got so much to think about before plunging into this.

Don't plunge into property. It's an highly illiquid business. Exiting is often a messy affair. As the tenant has rights to quiet enjoyment of the property. So arranging viewings and proceeding with a sale really means a vacant property. So all that previously earnt profit. Gets eaten away very quickly. More so if there's a mortgage to discharge.

Do your sums first.

As with any business. The key is a having a business plan. Majority of those that fail do so for this very reason.