let to buy dilemma. Help please!

havingaball74

Hello,
I am mortgage free on a terrace house worth approx 100k.
My partner has 40k savings.
My partner and I have just had an offer accepted on a house worth £210k.
We decided that we could purchase the new house using his deposit and then make a decision about what to do with my house. We need some equity from my property (40k) to bring down the new mortgage.
My problem is that I can't decide and the mortgage offer on the new place needs to go in asap. I thought that we could get a tracker for the new place using his deposit and then either sell the terrace house or buy-to-let later. Here are my worries:
1. If we set up a tracker now, there are fees and the valuation costs. The tracker buys us a few months to decide, but this seems a hassle and extra costs just for a few months (in order to move out, decorate house and decide). Is this viable?
2. Buy-to-let seems a good investment but not sure about the hassle, even using a letting agent. I might find it too stressful but am then tied in to a btl mortgage.
3. One IFA said go for a btl, the other said invest in an income portfolio. Both have ongoing risks, costs and fees attached.
I am so confused. We should have decided before having an offer accepted on a house, but we can afford to wait and decide in the very short term.
Please help!

G_M

Sounds to me like you are not really committed to being a landlord. Have you read:

* New landlords: advice, information & links

Why not sell the house and invest?

havingaball74

Investments that I have seen do not seem to have the same returns as a buy to let. Which investments do you suggest?

havingaball74

I suppose I know 6 or 7 close friends that have let-to-buy. I know alot about the risks of btl but investing in an income portfolio baffles me! Would regret selling and then house prices steadily go up. Once the house is gone, it is gone.

G_M

havingaball74 wrote: »

I suppose I know 6 or 7 close friends that have let-to-buy. I know alot about the risks of btl but investing in an income portfolio baffles me! Would regret selling and then house prices steadily go up. Once the house is gone, it is gone.

Once the stock market rises, if you fail to invest,the profit is gone.

For investment advice, go to the investment forum.

If as you say you understand the risks of BTL, and are willing to learn about being a LL, and wish to benefit from any property price rises that may come, then go for it.

As for the tracker, I don't understand why it"buys us a few months to decide, but this seems a hassle and extra costs just for a few months. Why can you not keep it for a few years or even 25?

havingaball74

The problem with the tracker is the rise in the interest rates in the foreseeable if I set that up.

Kynthia

Sell and focus on the purchase. If you really want to be a landlord and own a btl then you can use the money later to get one. That was you can spend time with an IFA comparing the returns on your investment then choosing a property that is best suited, is in demand by renters and gives you the best yield.

_CC_

BTL has proved a great investment over the past 15 or so years compared to other alternatives, but a lot of this is down to the leveraged nature of BTL (i.e. you're borrowing most the money for the asset purchase and at a cheaper rate than the likely return) and the large increase in property prices over the period.

If you're expecting similar price and rental increases going forward, then financially the BTL option makes sense as the borrowing would work in your favour. Although, as you allude, BTL is more a business than an investment.

Are you higher rate tax payers? Changes were brought in the last budget that would affect your BTL.

I wouldn't discount other investments merely on the fact you know other people with BTL. People in this country seem to have a strange attachment to property as investments, yet know little about equities, bonds and other investment types. You could use cash to invest in a private pension, S&S ISA etc and achieve a decent annualised rate in a tax efficient way. Was there any reason why the IFA said about an income portfolio? If you don't need the income stream it would make better sense to allow the dividends to accumulate.

havingaball74

The IFA said that he suggested an income portfolio as it is more of a direct comparison with BTL but that I could reinvest the income to aid growth.He said that it can be swapped for a growth orientated portfolio at any time, although the income would be less. Does that make sense?

G_M

havingaball74 wrote: »

The IFA said that he suggested an income portfolio as it is more of a direct comparison with BTL but that I could reinvest the income to aid growth.He said that it can be swapped for a growth orientated portfolio at any time, although the income would be less. Does that make sense?

For investment advice, go to the investment forum.

havingaball74

Thanks, I have also posted on investment forum, but was answering the question from _CC_ regarding the IFA. I suppose the question goes over both forums as I am trying to do a comparison between btl and other ways of 'investing.'