Help. How do landlords fund multiple purchases?

MoneySavingMission

I have a residential mortgage and 3 btl properties with capital repayment mortgages. I would like to do more but the 25% dep plus renov costs means I can only manage 1 every couple of years.

How do landlords borrow that enables them to have 50+ properties and move from one project to another without selling the last renovation and releasing monies.

Please help. Maybe i'm not getting the right mortgage products. I work full-time so no issue qualifiying for additional mortgages its the deposits etc that's limiting me.

any advice appreciated.

silvercar

Savings, borrowing against your residential home, revaluations and borrowing against existing properties, having interest only BTL mortgages to aid saving more of the rental income.

If you are updating the properties, they should increase in value, enabling you to borrow more against them.

Having 75% loans on your portfolio sounds a risky business but your choice.

caprikid1

Its a bit like a house of cards, if interest rates return to 5%, property prices drop , those renting maybe able afford to buy reducing demand for rental property. Big highly geared portfolios collapse as rent drops costs increase.

lovinituk

A lot of those landlords with multiple (leveraged) properties are sh*tting their pants now because of Section 24. Be careful what you wish for!

butters_86

Have you spoken with a financial adviser/accountant?
Are you planning on keeping the properties long term or short term?
Do you have any other investments before you put everything into property?
Between my partner and I we have 4 rental properties but are not looking to buy any others at the moment and are concentrating on investing and paying off the BTL mortgage that we do have.

MoneySavingMission

Thanks. Long-term investments. If rental income covers outgoings i'm happy.
I want to be a full-time landlord so really need to increase qty.

So i can borrow against an existing btl mortgage if lender agrees?

I'm saving for next deposit chunk. I dont want interest only, always capital repayment over short-term loans max 10 years.

getmore4less

MoneySavingMission wrote: »

Thanks. Long-term investments. If rental income covers outgoings i'm happy.
I want to be a full-time landlord so really need to increase qty.

So i can borrow against an existing btl mortgage if lender agrees?

I'm saving for next deposit chunk. I dont want interest only, always capital repayment over short-term loans max 10 years.

That's your problem if you want to build up a portfolio.

You need big deposits and very high yields to cover the debts over 10y even at low mortgage rates like 2.5%

lovinituk

MoneySavingMission wrote: »

Thanks. Long-term investments. If rental income covers outgoings i'm happy.
I want to be a full-time landlord so really need to increase qty.

So i can borrow against an existing btl mortgage if lender agrees?

I'm saving for next deposit chunk. I dont want interest only, always capital repayment over short-term loans max 10 years.

Are you aware of section 24 and its implications on the amount of tax you may owe? As you also have a full time job its possible you will be pushed in to the higher rate tax band if you are not already there.

Thrugelmir

MoneySavingMission wrote: »

I'm saving for next deposit chunk. I dont want interest only, always capital repayment over short-term loans max 10 years.

Hopefully you are declaring the income generated.

In the era of rapidly rising prices and easy to obtain finance. Releasing equity to leverage with was the name of the game. Enabling many to build sizeable portfolios on very little initial capital. Problem for many is now the time of redemption approaches. Being on interest only mortgages results in sales being the only option to find the money. This then crystallises a CGT liability. Also property needs to be vacant in order to sell. Resulting in additional cost. Not as straightforward as it may seem.

If you want more property quicker. Maximise your profits and save harder. There's no quick solution.

MoneySavingMission

Yes, all returns / tax paid each year.

That's the exact reason I don't want interest only. I know there's more income but I want capital repayment instead.

re upcoming changes in April - is this the removal of the income component of the mortgage for taxable purposes?

getmore4less

MoneySavingMission wrote: »

Yes, all returns / tax paid each year.

That's the exact reason I don't want interest only. I know there's more income but I want capital repayment instead.

re upcoming changes in April - is this the removal of the income component of the mortgage for taxable purposes?

Repayment makes no difference to the tax situation you only get relief on the interest

All repayment it does is reduce cash flow flexibility as you are committed to reducing debt, which goes against the aim of increasing the portfolio as you will be borrowing the money again for the next one.

if you need to fund by remortgaging it just undermine the 10y repayment situation.

should be getting longer i/o mortgage(subject to not increasing rates too much) so you can manage your cash flow and not have to save o much


maybe look at a large offset on one or more of the BTL or your own property to carry the cashflow/deposits/

.....................................
churn is another option, you sell a low yield and buy high yield but need decent CGT planning but long term churn can reduce long term CGT liability as you use more years allowances.

Aim for entry gross yield at 10%, to give decent margin on interest only borrowing.