IFAs and Buy to Let

JosephM_2

AdrianC wrote: »

No. Quite simply, no.

An interest-only mortgage still has a term - mainly 25yrs. At the end of that time, you WILL need to repay the capital. There are many threads heof re where people are reaching that term and are realising they need to find £100k they simply do not have, and are having to face selling their home as a result.

I understand that, but is it also not true that the equity in the property could increase considerably over 25 years and notwithstanding capital gains tax, paying off the mortgage would no longer be a problem? If it's a second property then selling it may not be an issue.It's not a definite, but given the growth in property prices over the last 50 years it's certainly a possibility.

AdrianC

JosephM wrote: »

I understand that, but is it also not true that the equity in the property could increase considerably over 25 years and notwithstanding capital gains tax, paying off the mortgage would no longer be a problem?

Yes, it could well have.

But you would still need to remortgage it to raise the capital to repay that first mortgage. And if you can't get another mortgage on it, which is entirely likely since you'll be in your mid-70s in 25yrs time...

JosephM_2

marksoton wrote: »

Oh i don't give a stuff mate.

Simply a case of give em enough rope and all that.....

Good answer. Have you got one long enough for booksurr? He seems to be obsessed with "size" at the moment.:eek:

marsman802

The comments above about being responsible and keeping a good relationship are going to be very helpful to you as a LL.

We've had the same tenants for nearly 10 years now and have replaced a water supply pipe out the front last year and churned a back boiler for a new condensing boiler the year before.

Just had a valuation completed and we are circa 20% below the monthly rental rate for the area but the place has never been empty, rent is paid on time, we have maintained a good relationship and delivered on what we said we would do.

Crucially the tenants are happy and the place has consistent income ensuring we don't have to worry about who is going to rent it from one year to the next.

A note on whether it was a good investment....at the time no because it was bought in 2007 and we know what happened next.
However it was a repayment mortgage for 7 yrs which paid down a lot of capital and the value is 43% above what we paid for it now so in hindsight it is.
Moral of that story is invest long term and pay down that mortgage!

JosephM_2

booksurr wrote: »

I will give you the benefit of the doubt that it is a question of size rather than reading ability so .... I will help you with an extract from my earlier link

How do buy-to-let mortgages work?

....Most BTL mortgages are interest-only, which means you don’t pay anything off the lump sum borrowed each month but, of course, at the end of the mortgage term you repay the capital in full.
humanity is finished then as it's taken me 3 pages to put 2&2 together

It's read as in "reed" not read as in "red".

"I can assure you I READ the small print carefully."

You don't expect me to have read all that boring stuff you sent me a link to, do you?
What I am saying is that whatever I hear from salesmen, property management consultants or whoever, I will read the small print carefully before making a decision. Let that sink into your shell like and go and have an eye test.

Thrugelmir

JosephM wrote: »

It's not a definite, but given the growth in property prices over the last 50 years it's certainly a possibility.

Hindsight is a human invention. The real winners spot the trends before everyone else. As once it's public knowledge not so easier to make money.

Generating sufficient cash to repay the capital owed from rental income, after all costs, interest and tax have been taken into account is extremely difficult. Then there's capital gains tax to pay when the property is sold. Certainly not a guaranteed route to riches. If one starts with a large debt.

booksurr

JosephM wrote: »

It's read as in "reed" not read as in "red".

"I can assure you I READ the small print carefully."

You don't expect me to have read all that boring stuff you sent me a link to, do you?
What I am saying is that whatever I hear from salesmen, property management consultants or whoever, I will read the small print carefully before making a decision. Let that sink into your shell like and go and have an eye test.

i am merely seeking to guide you through your own obfuscation

JosephM_2

booksurr wrote: »

i am merely seeking to guide you through your own obfuscation

I would describe it as misinterpretation rather than obfuscation.

booksurr

JosephM wrote: »

I would describe it as misinterpretation rather than obfuscation.

misinterpretation implies you sought to understand in the first place. I therefore stand by my choice of wording since you clearly did not, no one is that obtuse.

JosephM_2

booksurr wrote: »

misinterpretation implies you sought to understand in the first place. I therefore stand by my choice of wording since you clearly did not, no one is that obtuse.

YOUR misinterpretation not my misinterpretation.