New Build Disaster - help needed!

pcwilkins

Ivrytwr3 wrote: »

i pay £484 per month mortgage + letting agent fees + insurance + gas/elec safety certificate + any maintainance and my rent is only £440 per month!!!

My only driving factor is that we are now on the property ladder as i genuinally believe things are going to get worse before they better.

Do you mind if I ask how much the mortgage was for and how much was the price of the property?

You seem be making a fairly large loss each month and I don't see what you are getting out of it; the only way you stand to make a profit is if the value of the property rises. And as I understand it it's risky to rely on capital gains to make a profit --- they're unpredictable.

Peter

silvercar

Ivrytwr3, mines costing me as well, but I did it to complete a house chain, so I'm living with it.:)

My concern for OP is where he/she would go to get a decent BTL mortgage rate in Feb' 08. With high LTV and low rent vs. mortgage the options would be limited.

Ivrytwr3

Do you mind if I ask how much the mortgage was for and how much was the price of the property?

Property was purchased for £92.5k in Jan 2006 on a £85k mortgage (5 year fixed rate). We believe that the property is now worth £110k - £120k (3 bed semi where 3 bed terraced have been going for £110)

Turnbull2000

haymans74 wrote: »

Hi Trev,

There have been a couple of sales at £224,000.

We won't be in a position where we can't afford the mortgage as we didn't stretch ourselves to the maximum we could borrow - just in case interest rates went up. Which is a bit of a relief.

I am more interested in letting the property than selling it - as in the long term we WOULD make a profit (or break even, even that would do). I just don't know how to get round the bank!

How long is "long term"? If you manage to let the property, have you factored in voids (can you afford two mortgages), maintenance, monthly losses against rental income and agency fees? It could be a heck of a long, stressful wait just to break even I'm afraid.

mystic_trev

Ivrytwr3 wrote: »

i pay £484 per month mortgage + letting agent fees + insurance + gas/elec safety certificate + any maintainance and my rent is only £440 per month!!!

I'm sorry but anybody renting out Property on a 'negative geared' basis are Investing in a VERY dangerous situation. Most of these people would never ever consider investing in any other type of Investment that has 'negative gearing' why property? Worse still if the 'market' turns against you, with other types of Investment you can move your positions quickly, with Property you can't. When the Property market turns against these peoples 'investment' many will become Bankrupt.

eek

Dead_Eye_Jones wrote: »

Sorry for my cynicism but there are plenty of people wishing for a collapse in the housing market and this is just the sort of thread that they would conjour up!

I'm not wishing but expecting and fearing a crash.

Much like death, taxes and gravity, house prices have to fall because Banks have already used every method possible to keep prices high. Much like the states, they moved from income based loans to affordability based loans and then artifically reduced rates re-emphasis that affordability and increased the amount borrowed.
When (no if, but a possibly delayed, when) gravity re-asserts itself the drop is going to be very large.

lynzpower

My feelings about letting out are

1) you have to supplement the mortgage to the tune of at least a couple of hundred quid a motnh
2) you have to lie to your lender
3) you will not be paying off the mortgage at all, simply continuing to rent it from the bank

You will do this purely on the basis that you are risking that the value of the property will rise- which it hasnt, and judging by your competitors ( ie whats sold, at 224) and what else is out there ( houses with gardens at 219). In addition to that, youve also got developers chucking more up in your area, whenre they can offer such "discounts", and also offer something you dont have- NEW ness.
http://www.smartnewhomes.com/property/Details/1722037/Brand_New_Barratt_Homes_West_London-Apartments-_Axiom_120_Berberis_House_Feltham_Greater_London_TW13_4GR.aspx
theres every reason to suggest that the value of your property at best will stagnate, may fall further.

I would not chuck good money after bad.

in the meanwhile, how well is your property presented? Is it on the market RIGHT NOW? interest rates gone up again and primed to go up again soon, you want to make sure you can ride this out.

However, if you dont need to sell right now, I would wait.

haymans74

It's well presented. All neutral, very clean and tidy, not cluttered. It's a pain in the butt trying to live like it's a show home! Haha.

It's on the market at the moment and we have had viewings, but not many.

I don't want to lie to my lender - I would prefer to let it out all above board.


Looks like we'll just be sitting it out until we win the lottery then.

pcwilkins

Ivrytwr3 wrote: »

Property was purchased for £92.5k in Jan 2006 on a £85k mortgage (5 year fixed rate). We believe that the property is now worth £110k - £120k (3 bed semi where 3 bed terraced have been going for £110)

At a 4% interest you will end up paying back £133,537.73, even if the interest rate stays at 4% for the next 25 years. What you effectively did was agree to pay £130k (probably more) for something which at the time was only worth £92.5k. If you're making a loss each month as well, I fail to see what you get out of your investment...

Peter

Ivrytwr3

a house which somebody has paid 3/4 of the mortgage for me per month.

If it all goes t!ts up then i will simply move into the property (i'm currently in job related accommodation).

(and the house was worth £100k at time of purchase; we bought it from my in-laws at a little discount).