want to buy and then rent out

Doozergirl

englishdesi wrote: »

are you allowed to rent out a property on a residential mortgage ?

Not without permission, no. There is often a charge for this.

Also, if you have not owned the property for a significant amount of time and can't come up with a genuine reason for needing to let the property out, they can refuse as it will look like are doing exactly what Stabilo is advocating, which is trying to get BTL mortgage at more preferable residential rates.

dannyboycey

Are the people saying that BTL is still a good idea for real!!???

Doozergirl

dannyboycey wrote: »

Are the people saying that BTL is still a good idea for real!!???

I've got a feeling that this must have been posted on another board and then moved over to this one. Just shows what public sentiment is though There was me thinking the recent rate rises might have put a dampener on things.

lynzpower

tomstickland wrote: »

Now that every pub in the land has a resident property expert I just know that it's not a good idea. I've yet to find a money making idea that doesn't break the law of energy conversion. ie: put time, effort and money in and make money.

matched betting? :cool:

neasden

My partner and I are considering a BTL, changing the deeds on our house into his name and getting a residential mortgage on a second property.

I was told that if you can live in the second property (at least demonstrate that you have lived there through bills, council tax etc) for ~3 months and then (if needed) declare that we are getting back together and so will rent the second property for the term of the mortgage

What are the expected charges for converting a residential mortgage in to a buy-to-let mortgage

Can anyone recommend a link which describes the fundementals of CGT

m.r.davies

Speak to an IFA
ask around friends if they know anyone

basically, you need 10-15% deposit for a buy to let, but you need to make sure the rent covers the mortgage
so look around 150k and that should be about right

You are alowed 8k tax free on capital gains
So get your mom and dad to go in on the mortgage with you and then you got 8k each tax free, (then just get them to give you back the money)
of course, this is when you sell

dont sell though, just get interest only for 2/3 years, then re mortgage (free up cash with money the house has gone up in value), hopefully price of property has gone up!, then you get a let to buy on your next house and you only need a 5% deposit, move in for a day, and decide you hate it and move out and rent it
tell your mortgage company ....or dont (up to you)

keep doing this, make money work for you and you'll be rich when you stop buying houses!

you need to speak to an IFA about this though as they will tell you how to work the system so its above board

wecanhelpu

m.r.davies wrote: »

Speak to an IFA
ask around friends if they know anyone

basically, you need 10-15% deposit for a buy to let, but you need to make sure the rent covers the mortgage
so look around 150k and that should be about right

You are alowed 8k tax free on capital gains
So get your mom and dad to go in on the mortgage with you and then you got 8k each tax free, (then just get them to give you back the money)
of course, this is when you sell

dont sell though, just get interest only for 2/3 years, then re mortgage (free up cash with money the house has gone up in value), hopefully price of property has gone up!, then you get a let to buy on your next house and you only need a 5% deposit, move in for a day, and decide you hate it and move out and rent it
tell your mortgage company ....or dont (up to you)

keep doing this, make money work for you and you'll be rich when you stop buying houses!

you need to speak to an IFA about this though as they will tell you how to work the system so its above board

:rotfl: :rotfl: :rotfl:


Fantastic

silvercar

Just in case anyone is taking this seriously:

m.r.davies wrote: »

Speak to an IFA
ask around friends if they know anyone A mortgage broker would be better

basically, you need 10-15% deposit for a buy to let, but you need to make sure the rent covers the mortgage at least
so look around 150k and that should be about right don't know why 150k

You are alowed 8k tax free on capital gains 9,200 this tax year
So get your mom and dad to go in on the mortgage with you and then you got 8k each tax free, (then just get them to give you back the money)
of course, this is when you sell adding others to the mortgage and deeds has major implications for tax, inheritance, debt management, liability.........

dont sell though, just get interest only for 2/3 years, then re mortgage (free up cash with money the house has gone up in value), you could only remortgage if rentals have increased to allow you greater borrowing hopefully price of property has gone up and what happens if they fall?!, then you get a let to buy on your next house (!!!!!!!!) and you only need a 5% deposit assuming you can afford to pay a 95% mortgage, move in for a day, and decide you hate it and move out doubt the revenue will swallow that one and rent it
tell your mortgage company who won't swallow it either....or dont (up to you)

keep doing this, make money work for you and you'll be rich when you stop buying houses if you can afford to sell them without a massive tax bill, but oops you've remortgaged and spent the money, so you can't afford the CGT bill!

you need to speak to an IFA about this though as they will tell you how to work the system so its above board

HugoSP

dannyboycey wrote: »

I can't believe what I'm reading here!! We know that the majority of have-a-go buy to letters are losing money each month now.

How do you know this? I'm intreagued, as we are not losing at the moment. we are breaking even/ generating a small surplus on the property that has a mortgage secured on it. Over the next 10 years we will enjoy a reasonable increase in capital and the rent we get will increase as well. In the meantime the loan we have will not increase with inflation so in real terms this will cost us less. The house in question was bought in 2005 and a recent valuation put it at between 15 to 20% more than its initial valuation when purchased.

The other properties that don't have loans secured on them are generating a good profit. The capital increases that we're getting year on year, has beaten what we can get in most other mainstream investments. Plus they are generating an income.

Most are on interest only mortgages, so things will get much worse if interest rates rise again, and the monthly deficit will increase. Just doesn't make any sense at all.

The interest only mortgage is what is used to work out profitability. Any repayment or endowment is over and above this and actually goes towards paying the loan off, rather than simply maintaining it.

At the end of a mortgage term, say 25 years if none of the loan is paid off the landlord is still likely to be quids in. Conservatively the property could triple in value over that time - look back over the last 15 years!

Hence if I borrowed £40k and could only maintain the loan over the last 25 years by making the asset work for itself sold the assett and got £120k for it, and had to give back the original £40k I would consider it a success. I now have £80k that I would not otherwise have had.

Commercial enterprises operate in a similar way. Manufacturing organisation take on a piece of expensive plant that they pay for on a loan, maybe for the duration of its life. But if they can get more back for it that it costs them then it is a good investment. The loan and depreciation maybe 8% but the yield could be 10% At the end of its service life the capital equipment is sold, the loan paid off unless this has been achieved during its service. Even if the capital has not been repaid the business proposal would allow for capital and interest repayment from the proceeds of its deployment, and have profit to spare.

Admittedly there is no capital appreciation and the yield comes almost purely from its deployment, there maybe a little from its residual or scrap value at the end of its service. However with property a large chunk of its yield will come from its resale at the end of its 'service'. There is no depreciation, only appreciation, so you add that to your megre rental returns that you get in the first few years, which will only go up over the long term. The chances are that after a few years the rental income will outstrip the loan payments. The chances of the property being worth less than the LL paid for it after 5 or 10 years are slim.

The trick is to stay solvent though the bad times

Pssst

dannyboycey wrote: »

I can't believe what I'm reading here!! We know that the majority of have-a-go buy to letters are losing money each month now. Most are on interest only mortgages, so things will get much worse if interest rates rise again, and the monthly deficit will increase. Just doesn't make any sense at all.

Many BTL-ers are naive about the whole market. There are hoards of renters out there who thrive on it.. They put up a very legitimate front,can even provide refs etc ,then they move in,soon you find your rent isnt forthcoming,then you are paying wads to solicitors etc and taking months to move em out. When you finally get rid of them,they have trashed your place and left it debt ridden with all the people they have ripped off along the way,including you.