Mortgage free - would you buy again?

CDB199

Mortgage free and considering going down the "let to buy" route of releasing equity on this place, letting it out (so rent covers mortgage and place looks after itself), then using the funds as a deposit to purchase a new property that will become my main residence.

Have the option of then borrowing more funds, taking a mortgage on the new place as well so can work to big budget. Principally, the idea of the new property would be somewhere that needs renovating whilst living there making it a short to medium term investment.

Thoughts on whether this is a good option given change in 2nd home purchase fees & i would be going from debt free to taking on more?

Typhoon2000

Yes 3% extra stamp duty, but thats probably 1 yrs worth of house price inflation.
You will be able to claim interest tax relief on the mortgage on the left to buy and well as on the new property up to the value of your home you will be letting out. This puts you in a tax efficient position, as you will essentially be getting mortgage interest tax relief on the new home you will be buying with a mortgage as well as the mortgage on the left to buy.

MortgageMamma

It can only be a good investment if the figures stack up


Are you aware of the tax changes to buy to let investments and considered how they would impact you?


Have you read up on the responsiblities and costs involved in becoming a landlord? ARLA is a good website for that


What is your plan for the second home you buy would you remain there indefinitely or sell/rent out and move on to another project?

CDB199

MortgageMamma wrote: »

It can only be a good investment if the figures stack up


Are you aware of the tax changes to buy to let investments and considered how they would impact you?


Have you read up on the responsiblities and costs involved in becoming a landlord? ARLA is a good website for that


What is your plan for the second home you buy would you remain there indefinitely or sell/rent out and move on to another project?

Aware of the costs and responsibilities, yes & somewhat aware of the tax changes but will have to read up everything to make sure i am fully to speed.(any good websites for this? or a brief resume if someone wants to list here?)

Good investment? Well, figures are:
400K property. Likely income 1400 pcm.

Can release 200-250k and then pay 1000-1100 pcm on 20yr repayment Mortgage. So initial property wipes its face.

New property - borrow 200-250k. interest free @ 250-300 pcm.
purchase price 300-500k

CDB199

Up to speed on the changes to the tax on buy-to-let properties, yes. Sorry, should have said. Aware the mortgage tax relief will change year on year to Apr 2020

MortgageMamma

It looks do-able based on what you've said, but a lot depends on how you'd feel about the additional lending, and how you would fund any repairs etc needed on the rental property. You'd need to have an insurance policy to cover loss of rent, malicious damage etc or have a figure set aside to cover these things. If you get the wrong sort of tenant in it could cost you a lot in the long run.






Go to the association of residential landlords website. There is tonnes of information on there that will help you decide. You might need an accountant for example.

If you do decide to go ahead vet your tenants alongside the agency, do your own homework, check out where they live and if their property looks well cared for before you let them set foot in yours. In my experience references are not worth the paper they are written on, some ll's are happy to offload bad tenants on to other landlords. Make sure you take bank statements to see there are no rent arrears. In the past I've asked them to do a search on their online banking and bring up a list of rent payments bank transfers. Another thing to consider is that some lenders don't like housing benefit/council tenants in properties so make sure you check this.

Good luck with it

Thrugelmir

CDB199 wrote: »

Can release 200-250k and then pay 1000-1100 pcm on 20yr repayment Mortgage. So initial property wipes its face.

New property - borrow 200-250k. interest free @ 250-300 pcm.
purchase price 300-500k

Can you afford a £400k - £500k mortgage if needs must?

Likewise if interest rates rise in the 20 year time frame.

Where are you borrowing interest free from?

There's no guarantee that property prices and rent will rise to offset the change in interest rates. Leveraging with debt is double edged. Magnifies gains however magnifies losses.

CDB199

I don!!!8217;t intend to have a mortgage of 400-500k.
One of 200-250k that would be covered by rental income.
An interest free mortgage on second residential home that would be minimal monthly payment. L&C have many that would be £300 pcm if borrowing 200-250k.

If anyone doesn!!!8217;t think the numbers are that much in my favour then is selling the more viable option and using the money as a much bigger deposit on new place?