BTL mortgage el-dorado?

remorseless

still can't get bricks out of my head

Do BTL mortgages provide (any) good tax incentives?
In the past I preferred to save up and buy a flat to let out outright in cash... would it be better to keep a property let out under a mortgage?

Any advice or better, example?

Thank you

ermine

remorseless wrote: »

Do BTL mortgages provide (any) good tax incentives?

You can offset the interest paid against your revenue because it's a cost of doing business

The advantage of using mortgages is that given a certain amount of capital you can buy more houses and therefore [STRIKE]fleece people more[/STRIKE] make more money out of a given amount of capital.

I don't have a dog in the race but have known negative equity, which of course kills you faster with a mortgaged portfolio. Of course house prices never fall so that won't be a concern for you.

remorseless

ermine wrote: »

Of course house prices never fall so that won't be a concern for you.

haha I know right!

Is offsetting interests a huge savings? I don't like debt too much... so don't much about interests! I prefer to pay cash and in full!

EdGasket

The fact that newbies are looking at getting into BTL and the 'make money from BTL' seminars are springing up all over the place again tells me that the property market is peaking right now!

remorseless

EdGasket wrote: »

The fact that newbies are looking at getting into BTL and the 'make money from BTL' seminars are springing up all over the place again tells me that the property market is peaking right now!

you may find that as more people are born... more people may want to look into expanding their options which may also include property.

EdGasket

remorseless wrote: »

you may find that as more people are born... more people may want to look into expanding their options which may also include property.

I've been around long enough to have seen it all before mate. Good luck but profits are not guaranteed.

lalman

Clearly property prices can go up as well as down over the short term and long term as with any investment. That's why you factor in risk and tend to have a higher rate of return than say a bank for such things...


I invest in BTL properties and although I don't think a lot of landlords factor in all of the variables... i.e. insurance, untenanted periods and refurbishment I don't think its a long term bad investment and nor do I see it that I am fleecing my tenants either.


They are requiring a service, the market determines the price... if they want to pay it they can stay at my flat or go somewhere else...


I think the perception of landlords is wrong, we are all trying to make our way in life and although it is lovely when I make X through capital appreciation, I don't take it for granted.


I personally don't think property has peaked, and even if it has... its a long term investment, everything goes up and down... so you should be able to deal with rate rises and price drops if you have built in enough flexibility into your investment model.

remorseless

thanks - my question was really more about for a landlord is it better to:
- keep the property on a BTL mortgage
- own the property outright with no mortgage

If on a BTL - what are the incentives beside offsetting interests?

Being a landlord needs consideration and of course there are more expenses than just land tax!

Property may have peaked somewhere but the world has many other places! Just because yields are low in London, doesn't mean they're low everywhere else (or that the won't turn around)

Pinner_Ram

I looked into this myself some years ago when I had BTL properties, I'm out now, it's not a business in my view, it's all hope and little profit.


If you have a mortgage, yes you can off-set the interest against your tax bill.


However, if you do not have a mortgage, you pay more income tax BUT you have more in your pocket at the end of the day by not paying the interest on the debt. Or at least this was the case for me at the time (2000 - 2007)


DOYR etc.


PR

steelbru

Speculation that loads of people who can in a few days cash in their whole pension may us it to jump in to BTL, so property prices may still be on the way up ?

lalman

Its all about personal risk tolerance....


With 100k you could buy 4 BTL's of 100k each (400k total but own 25%) or 1 clear 100k property... You are likely to generate more cashflow from the 4 properties obviously... but more susceptible to movements in the market as you are more leveraged.


I remortgaged my first property which I put down 25% due to capital appreciation so now it has 40% - this offered me a rate improvement down to 2.39% and the difference between last mortgage and this is pure profit... I think BTL landlording is not a short term thing, but rather a long term investment...


Also, I feel you tend to make your capital appreciation when you buy the property - if you over pay like a lot of people do... that can effect long term performance quite badly...