Loaned money for deposit

AdrianC

HeadSmashedThreeWays wrote: »

...we are in London ... and our rent is now a joke compared with what we would pay if we brought.

I think you need to rework your sums. Rents in London are relatively cheap compared to purchase prices - or, to put it another way, BtL doesn't make any money, because yields are so low.

How much rent are you paying now, how much would you be looking at to buy a similar property, how much savings do you have for a deposit, and how much do you earn?

cyantist

HeadSmashedThreeWays wrote: »

We could carry on renting but our issue is that we are now paying £1500 a month for a house that's fine but single glazed, a bit shabby. We are in a sought after and expensive part of london so this is common- believe it or not we are in a better house than many!- and basically landlords can charge what the heck they like. Our rent has gone up twice in a year now and we are just sick of throwing good money after bad.

If your rent is £1500 a month for a house and you live in an expensive and sought after area, how much would it be to buy a decent property?

When we were looking to buy, shabby houses even in very bad areas of London were well over 500k (and seem to have gone up even more in the time since then), which would mean a mortgage way way higher than £1500 a month even if you could put down a huge deposit.

saajan_12

AdrianC wrote: »

I think you need to rework your sums. Rents in London are relatively cheap compared to purchase prices - or, to put it another way, BtL doesn't make any money, because yields are so low.

How much rent are you paying now, how much would you be looking at to buy a similar property, how much savings do you have for a deposit, and how much do you earn?

Good point, I was recently looking for a 2 bed flat to buy and rent out, across zone 2. My sums worked out to:
450-500k purchase price
50-55% LTV BTL mortgage
£900pm interest only mortgage
£2000 rent income

Granted I was working on a BTL mortgage, but with a low LTV, my interest rates should be comparable to a residential with 80+% LTV. Also this is fairly annecdotal, but I researched a LOT of properties and used recently sold / rented prices off Rightmove.

So along the lines of my numbers, a 90% LTV mortgage would be £1530 interest monthly. Then there's repairs which a LL does if you're renting, but you take care of as an owner occupier: if you could rent a similar property for £2000 pm and the rule of thumb is 10% of rent on average, so that's another £200 pm.

So you're £1730 down on just 'money down the drain' compared to a rent of £2000 plus you need to make capital repayments.