How to work out finances for buy to let mortgage

Typhoon2000

You would get tax relief on profit (rent) if your are taking out a BTL mortgage on the first flat. You only pay tax on the profit after expenses, not the total rent. So any taxable gain is likely to be small unless you are putting up a big deposit. Also if the BTL is in joint names, the profit is split between you both so the over tax bill will be less than if it was just in his name.

lonestarfan

badgerbread wrote: »

Sorry didn't make myself clear we want to change one we are in now to buy to let and rent it out and keep it in my name. Buy new property in joint names to live in. My husband is totally with me on this he earns £49700 so financially we are sound. We don't have any extra savings as such at the moment because we have been paying off our mortgage.

I can't see how you will be able to buy the second property. Most btl are 75% LTV but one of the brokers will explain more. 75% of £260000 is 195k. They almost never value at what you think so £260k might not be the btl valuation. Then you have to achieve a rent of 125% of the mortgage payment but that mortage payment is calculated at 7% even tho you're not paying 7% rate. Pay off the current mortgage of £189 with the btl mortgage leaves £6k. You've no deposit to be able to buy the next house. Plus you'll need money for stamp duty, solicitors costs, btl fees.
I might be wrong so the brokers will correct me.
Also are you certain that you will get your son into the new good school in the new area even if you are in the catchment area. If they are oversubscribed then you still won't get in and will have moved for nothing.

getmore4less

What will your place rent for?
What is the rate on your current Mortgage

How much cash do you have?

lonestarfan

getmore4less wrote: »

What will your place rent for?
What is the rate on your current Mortgage

How much cash do you have?

Post 7.
The OP says :- We don't have any extra savings as such at the moment because we have been paying off our mortgage.

Foxy-Stoat_3

You could probably get a Consent to Let on your current property as long as you can achieve high enough rent, and you have say 2/3 months mortgage payments saved up.

As for trying to buy another property for £280,000 with no deposit you will struggle.

Are you 100% sure that you want to become Landlords and everthing that it entails?

Edit, just seen your recent post. No savings = keep on trying to sell your current property and move when you have found the right buyers.

lonestarfan

What we did was rent out our place and rented a place in the new catchment. That's always an option if you can't buy.
Being a landlord was lots of extra work tho.

Foxy-Stoat_3

lonestarfan wrote: »

What we did was rent out our place and rented a place in the new catchment. That's always an option if you can't buy.
Being a landlord was lots of extra work tho.

That is not a bad way to go, it will give you say 6-12 months to decide if you want to be a Landlord or not, also it will give you more time to save for a deposit and comming from a rented place, will make you a better prospect to potential vendors.

If you decide that being a LL is not for you, and you can take possession of your old property easily and its not too trashed, you can sell it empty a lot quicker.

amnblog

A lot of blah blah on this page but the bottom line Badger is that provided:


1. You have sufficient deposit for the new property
2. The existing property will rent for enough


You could well be in business on this idea.

getmore4less

lonestarfan wrote: »

Post 7.
The OP says :- We don't have any extra savings as such at the moment because we have been paying off our mortgage.

Non starter then.

There is not enough equity to raise the funds to get another place.

lonestarfan

amnblog wrote: »

A lot of blah blah on this page but the bottom line Badger is that provided:


1. You have sufficient deposit for the new property
2. The existing property will rent for enough


You could well be in business on this idea.

Ok AMN. The blah blah aside, I'll pick out the figs for you. The posts say this:-
Value of existing property 260k
Loan outstanding 189k
Equity 71k (only if surveyor values it at that)
Value of new property 280k
Salary £49k and £13k
No other savings.
No rental figs supplied.
How do they keep both properties on these figs.