No money down portfolio

AnotherJoe

phillw wrote: »

Have you ever considered multiple identities who are officially resident in different countries and holding property in off short trust accounts?

Hot climates only presumably ?

Pincher

phillw wrote: »

Have you ever considered multiple identities who are officially resident in different countries and holding property in off short trust accounts?

No, but I know a family who is bound to be into that stuff.

There is only one principal private resdience, CGT free, that you can have. So they need to have one house each in the UK. And then there is the rental portfolio.

Switzerland only allows one property per non-Swiss citizen, so obviously they bought one each.

elephantrosie

can someone elaborate more about no money down deposit in BTL? I still dont get it. sorry noob here.

eskbanker

elephantrosie wrote: »

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You'll need to ditch that from your signature, or one of the admins will do it for you! It breaches several of the forum rules including advertising, personal gain, links in signatures, referrals outside referral board, etc....

AndyT678

elephantrosie wrote: »

can someone elaborate more about no money down deposit in BTL? I still dont get it. sorry noob here.

The theory is you buy a property in the usual way, normally with at least 25% deposit for a BTL mortgage then remortgage once the property has risen in value to release the equity that you originally contributed. You then have an asset producing income which has none of your money invested in it.

There are also many ways in which it can go (horribly) wrong.

Pincher

elephantrosie wrote: »

can someone elaborate more about no money down deposit in BTL? I still dont get it. sorry noob here.

Turbo mode No money down
==================

In 1997, get a self-certificated 100% LTV mortgage.
Preferably interest only.
Assuming 5% interest rate, that's £10,000 on £200k.
Get £18k rent, end up with £3k after deducting interest, letting agent's fee, service charge, repair and maintenance costs.
You only need to pay income tax on the £3k each year.

By 2016, the price in London has quintupled to £1million, and you are getting £30k rent per year.

See the Buy To Let tax regime being squeezed by the chancellor, sell and run for the hills.

Two stage no money down
=================

In 1997, get a £150k, 75% LTV mortgage.
Preferably five year fixed interest only.
Assuming 5% interest rate, that's £7,500 on £200k.
Get £18k rent, end up with £5.5k after deducting interest, letting agent's fee, service charge, repair and maintenance costs.
You only need to pay income tax on the £5.5k each year.

The second stage is switch to a £200k mortgage when the five year fixed ends. The property has gone up to £400k, so you can borrow £200k instead of £150k. Note that HMRC will only allow you to deduct mortgage interest on £200k, the initial acquisition cost of the property. So, if you borrow £300k, you don't get tax relief on the extra £100k.

You are now on the same trajectory as the Turbo mode.


Mortgage Express
===========

Around 2003, right on cue, Mortgage Express, an off shoot of Bradford and Bingley, brought out a five year fixed Buy To Let mortgage. The 5.25% was competitive, but Scottish Widows was even cheaper at 4.99%. The significant difference was the BOE + 1.75% tracker after the five year fixed period. I was paying 2.25% from March 2009 to March 2016. :rotfl:

Even better was to get an offer from the lender to leave, for a discount. E.g. pay them £160k, instead of £200k, to clear the debt.
As Mortgage Express was saved by the tax payer, they didn't need to be desperate to get rid of me. I was thinking, surely it's cheaper to pay a Ninja £10k to assassinate the borrower, and save £30k?

Götterdämmerung
===========

From 1st April 2016, you pay an extra 3% stamp duty to buy a Buy To let.

The capital gains on property now pays 8% more than stocks and shares.

Basic rate 18% vs. 10%
Higher rate 28% vs. 20%

More importantly, the mortgage interest tax relief is being whittled down in the years to come.

It probably still makes sense to have one BTL as a retirement income. You might even be able to get a BTL mortgage when you are 60, but when you are 65, and want to re-mortgage? Try to go to the pub with your 30 year old colleagues, and not be ignored.