Help,location location but want to be mortgage free!!!

elle37

Thanks again for the ideas!

You could get another decade out of that.

I'm thinking a leasehold of 85 years isn't going to sell as well as 95 and the value of the property goes down in line with that so I'm told.

that is 5 rentable rooms and in London zone 1 it is about £550-850 p/m for a double - 2k5 p/m (minimum) rental income.

Now this sparked an interesting thought, totally aware having read your ideas that I'm in the adverse to risk catogory btw. But no reason why I can't look more into the lodger idea as an income source. I'd consider doing that in the freehold place but def don't want to remain leasehold.

Your only 37- still a yummy mummy
Yes I do need to remember that:j


The other issue is that if you can afford a deposit of a second three bedrooms house now, in five year time you may only be able to buy a two bedroom, and in ten years may not even raise enough deposit for a flat,

such a good point for me to bear in mind. Gosh I strayed to the dark side :eek:and slightly away from my original question but good to explore, I'm refining as I go along

1) freehold good area compromise on property (doer up or smaller size) thus smaller mortgage
2) as above get lodger, income stream.
3) sell then option 1 or 2 plus buy a property 2 to let out then sell later on. Could only afford a flat. I know based on my figures this is do able now but would need prof advice re stress testing if that was an option.

elle37

CobaltBlue wrote: »

OP - didn't realise you were in London...

...that's just....crazy..?!

Could you explain??

CobaltBlue_2

You want to be mortgage free?
But you're living in London?

bluesnake

I'm thinking a leasehold of 85 years isn't going to sell as well as 95 and the value of the property goes down in line with that so I'm told.

Yes, but will it go down a bit, and be slightly less attractive, but compared to the asking price probably not a lot. The main problem living in a communal block are major service charges, and these rear the head every five or more years but are now capped to 15K (12k for non-landlords)

I'm in the adverse to risk catogory btw. But no reason why I can't look more into the lodger idea as an income source. I'd consider doing that in the freehold place but def don't want to remain leasehold.

I am also adverse to risk, however you have already taken a much bigger risk purchasing your own house.

Buying house2, tenant will overpay you more than the mortgage cost, and if the figures do not work, you either have to enlarge the deposit or walk away, as you will not get a mortgage otherwise. Most people for tax purposes choose an interest only mortgage, and it does not stop you from investing the savings, or in the bank, or isa, etc

Here in the London UK, virtually all BTL make money. Your rent will increase yearly. The mortgage will one day also increase too, but even if the mortgage increases cost you £300 p/m from your own pocket, that £300 is tax deductible, but in a continually rising asset market, depending on the value of an asset, it could be worth loosing (contributing from your pocket) £300 p/m for a 800k house for a few years. You may also not be allowed to rent to certain types like DSS/unemployed claimants, as it may be apart of the mortgage contract.

There is risk in everything. Go to virtually any forum here, and there are people that have been stung. Some have bad landlords, some have bad tenants, some have new car gone bad, others ripped off on purchase of a second hand car, new computers not working, and the list goes on. Sometimes one is just unlucky, and sometimes you have to cut your losses. However not all tenants are bad, and neither are all landlords

No risk, no reward. Often greater risk, greater your responsibility. Risk equals growth - usually a rewarding growth, but there are failures too. Risk - there is good risk, and bad risk. A bad risk it to follow my ideas and 'just do it', evaluating situations in haste, go into a situation where you can see no exit point, have no backup plan, can't afford to cut your losses walk away licking your wounds, or go to a casino.

A good risk involves listening to yourself, planning a balanced approach, working out scenarios, how can you do it so things work for you, Making sure the reward outweighs the risk. It is listening to that voice inside that says 'it could be a good thing long term', though some here will say in the long term we all die;)

Also the lessen the risk apparently there are at least two insurance companies (Ensleigh & ?) that will insure your rental revenue, so even if the tenant does default you are covered.

1) freehold good area compromise on property (doer up or smaller size) thus smaller mortgage
2) as above get lodger, income stream.
3) sell then option 1 or 2 plus buy a property 2 to let out then sell later on. Could only afford a flat. I know based on my figures this is do able now but would need prof advice re stress testing if that was an option.

Fees will cost you. Moving further away will probably cost you and the rail fare goes up, travel time too often goes up. Yes you are trimming your mortgage, cutting your risk, but I feel you also have devalued your nestegg and may also incur other expenses like transport.

My friend had a 1 bed flat in Elephant (some 13 years ago) and it sold for £85k. He moved into a 125k 3 bed house in Gravesend. Now he gets the cheap £320 travel a month ticket, because he avoids rush hour charge but has to leave before 7am. Each way the journey takes 1.5+ hours, when before it was literally a 20 min walk. His property in Gravesend is now worth £240k the Elephant one £450k. He now also can't afford to move out either, but would like to move back to Elephant area, and so has ended up with a bigger mortgage and bills. He is on £55k but over 2k p/m goes into bills and he is able to save £220p/m at a squeeze. Claims it is working for him, but no one believes him at work. - I wish you not to be in the same position as my friend, though he still does have a house, which is more than some.

Unless you can physically do it yourself it will may cost to get the 'little men' in to do the jobs, you need to be in 'the trade' these days to often make it work financially. Many women would not live on a building site for 2-3 years , but if you have a son at home whom you can cajole into slave labour - why not.

Lord_Baltimore

To be fair, Bluesnake and CobaltBlue have been very forthcoming with ideas. My only concern is that, with health issues, you need to keep to the simpler options so as to avoid adding headaches and stress.

I guess that's why they call it the Blues

bluesnake

CobaltBlue wrote: »

Blue Snake - interesting story about the girl being put off by the rough area.
I would ask why he drove a Porsche convertible?
Was it to impress women?

That's a whole other topic though.....

He was a young high earner - a contractor from up north, had a 3 bedroom there too, and rented an expensive house down south in the suburbs and bought a Porsche for the driveway and weekends. He and his girlfirend split - her choice if car, which he told us was devaluing by £1k4 p/m. He did not want to renew the house lease, and also some months later was headhunted by a big USA global company and so he just needed a place to lay down, close to work and sort his life out and finish his contract till is green card came through.

CobaltBlue, agreed simple is good, but not always the best, otherwise we all would be squatters, yet they seem to be very happy.

If you have downsized, then there is not that much meat on the bone to cut any more. The problem as we get older, more infirm, less employable, more resistant to change, we may have to rely on that meat, and that may well be the time to cash in, rather than now? Sometimes cashing in today and being debt free, enslaves, rather than liberates, kills the goose that is laying the golden egg, allowing a for only a fixed limited income/second job with few ways out, and far less choices, often becoming a slave to McJob is the only way to put food on the table and pay bills.

elle37 has health issues, may take the next rung up the job ladder, but hopefully she will explore all avenues, and I'm sure she will choose the best one. We all choose the best one.

When I was young my parents encouraged me to steal ideas, copy the method, and take risks. I had many many attempts and setbacks, there were times I could not get up, and often I gave up, but within a few weeks later I was also able to walk:) It is always easier too look back and know what should have been, rather than looking forwards to where I'm going. Now older, I admit again I have stolen peoples ideas, and copied their methods, and although still a novice, it has put me ahead of where I was, but with hind site not where I could have been, mainly due to me being risk adverse and too afraid, rather than having bad ideas. Still I am doing better than some, and doing far better than doing nothing. Many people helped me, and in thanks, hopefully I can encourage other to steal ideas.

bluesnake

CobaltBlue, "Golden Goose", This year the London market has risen 15% and in some areas 22%. At 5% takes about 8-9 years to double. Yes, these are stupid bubble rates. Some say they will go down, other say it is a global correction the economy, but 85%+ of newbuilds are sold overseas and do not make the UK market.

On the other hand I bought 22 years ago, paid 52K, one guy in the block wanted a quick sale last year and sold for 250k.

I was left choices to move up, or save. Moving up leaves more personal risk (illness, redundancy etc.) and debt, saving generates little return, or to buy house2 and let tenants pay the interest, which is the best risk reward ratio.

Just because the house is your, you are not free to do with it as you wish. Think you now need to register if you run a HMO with the council and pay fees, just try and give it or two away to the same person, there are many businesses you are not allowed to run from home. Dig in your garden and find an oil well, sorry that is not yours either

"Out of debt, out of danger" - can't disagree. Everything has an element of danger from eating food to driving cars, and cars depreciate. All entrepreneurship involves risk.

"To have savings plus a mortgage makes no sense, most of the time." I would agree and in the past believed the shorter the mortgage the better. That was until a few months ago. Then my friend whom is a few years from retirement said she was moving, bought a bigger house outside London. She (the mortgage) bought 1 bed around 170k 10 years ago, and it has now sold for £320k. Because of her age, she unable get a new mortgage, so she has to transfer the old one. This in real terms to her means that she must be a part of a chain, and just can't live somewhere and then shop around. Her first seller has already cancelled the sale, but with seller2, and if it has gone through, taken her about 9 months for her buyer to purchase.

elle37

All so helpful and very different perspectives which is also so useful for me as I few people to bounce ideas off of.

Lord Baltimore is right to remind me of health issues, I need to keep things simple. This is why i've been mulling over this for a while and ended up here, although what I thought was a simple set of 3 options has led to so much more!

But I'm also thinking about this in relation to BlueSnake post's about meat and time, as time goes on i'll get older and at this point no idea what my health or employment will be like in 10-15 years time (none of us do I guess) . Good job now recently promoted (very fortunate) but having been super healthy most of the time then to suddenly not have the get up and go I used to due to health has thrown me a bit. I guess it got me thinking what if, what if i can't keep this up? what if things get worse and I had to part with my job? what if i could only manage part time? So my original thinking was right, aim to pay it off as quickly as possible. What you've all helped with is thinking about the various ways to get there.

I've moved about in London from Zone 3 to currently 4 to potential area being Zone 5, and yes each time it has cost more to travel to work (London Bridge) and yes currently leave at 7am to get to work! (how did you know bluesnake) this most recent move I hated that I lived 5 mins from the station and had moved a whole Zone out but I got used to it and I guess absorbed the cost. It was also the next step up the ladder although in hindsight at the time I could have afforded a freehold (one of those silly mistakes) could not afford one now in my area. Regrets annoy me and in many ways I don't want to look back and think damn I live in a dive and I've no means of getting out ! Hence i'm going to map out the pros, cons,costs (health/financial) of each idea- why the hell not at least that way I can include/discount each.

I asked for opinions and I've got much more than I expected! I'd never do anything without fully exploring and seeking professional advice so don't worry people, i'm not about to sell up and dive in just yet. It's just really helpful to explore 'other options'. thanks so much- I'll keep updating and hopefully you'll all be around to see what happens next!! also I may need more opinions

bluesnake

CobaltBlue wrote: »

Living in London is not good for anyone's health....

.... but often does increase your wealth. - is that the saying?

One more link for elle37 and CobaltBlue
https://www.youtube.com/watch?v=vBX-KulgJ1o

Lord_Baltimore

bluesnake wrote: »

.... but often does increase your wealth. - is that the saying?

One more link for elle37 and CobaltBlue
https://www.youtube.com/watch?v=vBX-KulgJ1o

Another saying is there are no pockets in shrouds