BTL mortgage el-dorado?

Daniel54

steelbru wrote: »

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 ?

Once they work out how much income tax there is to pay if the whole pension is cashed in,most will work out what a lousy idea that would be

Don't see this moving the dial in terms of BTL

ermine

remorseless wrote: »

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

Dude, if you can't qualify this yourself, what the hell are you doing in BTL?

Simples - prices go up - use OPM and mortgage to the eyeballs. Since the downside is going BR, it's a one way bet - against those who can't raise the cash to buy a house

Stroot1

ermine wrote: »

Dude, if you can't qualify this yourself, what the hell are you doing in BTL?

Simples - prices go up - use OPM and mortgage to the eyeballs. Since the downside is going BR, it's a one way bet - against those who can't raise the cash to buy a house

Is it positive to artificially raise house prices and price first time buyers out some more by getting on the BTL train? Appears a bit like those who have capital shafting those that don't and making an easy buck through reduced mortgages? Maybe there's more to it and Lalmans right though, I guess some private landlords are needed. Sorry to take it a bit off track, new here and just been looking in to the ethics of BTL recently!

chucknorris

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!

Or possibly about to go even higher, then fall, it reminds me of that old saying about Joseph Kennedy getting out of the stock market before the crash in the 1920's, because even shoe shine boys were giving stock market tips. Saying that, shares are what I am currently investing in.

ermine

scholes22 wrote: »

Is it positive to artificially raise house prices and price first time buyers out some more by getting on the BTL train? Appears a bit like those who have capital shafting those that don't and making an easy buck through reduced mortgages? Maybe there's more to it and Lalmans right though, I guess some private landlords are needed. Sorry to take it a bit off track, new here and just been looking in to the ethics of BTL recently!

I fear your irony detector failed in service Although since money is crystallised power (in representing a claim on future human work) those who have it have shafted those that don't since time immemorial. It's what power does.

I personally am innocent of the implied charge, as I said, I don't have a dog in the race. I was seriously hurt by the British housing market when I stupidly bought a house in 1989 at the height of the Lawson boom. That was a five times income multiple and with a 20% deposit. Sound familiar? I sweated the next few years and saw people on either side get repossessed. As a result I regard property as an evil, loathsome asset class and apart from owning my house outright don't touch it. Equities are my drug of choice, and these too will no doubt take a hit in the medium future when the chickens finally come to roost. Ebb and flow is what markets do.

Property hurts everybody in the UK. The putative middle classes get into it as BTL landlords because property only ever goes up, well, until it goes down but that hasn't happened for a while because market cycles of property are much slower than business cycles or the equity markets.

These same middle classes think they are so smart with property because of the income from one or two houses bought with other people's money. They use the cash to stick their kids through public school, and then they are all surprised when their adult children don't leave home at a civilised stage of their lives as people used to do in their early-mid twenties. The dots don't get joined that the parents are eating their children's futures to maintain their lifestyle while globalisation means they don't earn enough to pay for their lifestyle.

There's gonna be hell to pay when interest rates revert to the long-term mean for the UK, which is about 6%. I personally paid 14-something% in the 1990s. The most dangerous words in any economic market is 'it's all different now'. We shall see if the irresistible forces of mean-reversion are greater than the immovable object of Britain's amateur landlords and the eternal sunshine of their house price optimism. I cannot say when the Minsky moment will happen. But I'd be surprised if it doesn't.

Lalman is right - qualifying risk is key. The way to make money with volatile assets is to be able to remain standing throughout a market drawdown without becoming a forced seller. If you can be a buyer even better, but stay standing is what matters. Very few people understand what that really means. It's hard enough in the equity markets, which have short cycles and you usually don't buy leveraged. The housing market has long, langorous multi-year cycles that grind the undercapitalised and overleveraged out year by year - it was nearly 10 years before the market returned to the 1989 high water mark. I threw cash into the toilet of negative equity for years to be able to move, because an 80% mortgage amplifies movements five times. That's great when things are going up. And living hell when they are going down.