Own a property but want to buy another with partner

Lacherlich

Hi

I was wondering if someone could offer some advice as to whether or not this would be possible: I currently own an apartment on the help to buy scheme. I am hoping to purchase a new property with my partner but keep my current home to rent it out.

I know i would need to turn my current mortgage into a but-to-let; which at this stage I dont think is possible as the loan cannot be more then 75% of the value? Bearing in mind with H2B I only put in a 5% deposit and have only lived here a year. Plus I'm guessing I would need to take on the H2B loan within this new buy-2-let mortgage as i wont be able to keep the apartment on H2B if letting it out.

Secondly - with the new property it seems we would still need to pay for stamp duty as I already own a property; even though my partner does not? Plus help to buy wouldnt be an option as again i would already own a property?

Are my assumptions correct or are there any ways this could be more feasible without me having to sell my current home?

Thanks!

buggy_boy

Ive not got much experience of H2B but I would question why you want to keep your current property, do you really want to be a landlord? Ignore all those that say it is an investment, its not its a business and can take a lot of work...

It would seem you have little equity, have you done your sums.. How much is the property worth (Realistically), what is the rent you will get (realistically). You might be paying 4% interest, if you use a letting agent they will take 10-15%, there is maintenance including gas safety certificate, insurance, your block maintenance. If you are a 40% tax payer over the next few years you will eventually be paying 20% tax on the interest (yes thats right paying tax on money you have paid out on interest), take into account you might have voids go on a 1 month in 12 months void, you need to still pay mortgage etc. Then there is the risk if a tenant stops paying or trashes the place you could end up with a £5-10k bill.

Unless you live up north and have a really high yield property I don't think the sums will add up, especially when you calculate you will pay an additional 3% SDLT on the new property. (Paid on the entire value of the property)

BTL has changed its now all about cash is kind and incorporating..

Cakeguts

You are heading for a disaster. Not every property makes a good rental property. If you want to become a landlord you need to research what lets. You can have a property that you are quite happy to live in but has so many disadvantages as a rental that you never ever get good tenants only the kind that wreck the place or don't pay the rent or both.

Lacherlich

Hey. Thanks for the comments.

Well the property is in Birmingham city centre; house prices are expected to go up by 30% within the next few years due to HS2 and all of the redevelopment taking place in the city. It is right next to Snow hill train station (central). Thats the main reason for wanting to keep it.

Obviously these are the early stages of me looking into this so i could be wrong!

Property was £165k when bought; I reckon it could sell for £170k now; I have about £15k equity. So not a huge amount. Rental potential of about £800 - £900 per month. Current mortgage costs £380 a month. Obviously buy to let may be more expensive as for a larger amount c.£140k instead of the current £120k and whatever the interest rate is.

(After looking into it i dont think it would be achievable anyway as things stand; but my partner thought it may be worth him going on my mortgage too; putting some into it so within a year we own 25%; so then turning it into B2L is doable; and then we can buy the new place together) But again let me know if you think not such a great idea!

Cakeguts

The problem with rental properties is that however careful you are you cannot avoid people who lie. So you have to be prepared for if you don't get rent for 6 months while you go through the eviction process with the courts. If you think that you may not be able to pay the mortgage for both properties don't do it.

shirlgirl2004

You can buy rent guarantee insurance as long as you take appropriate references but to be honest it looks as though you are a long way off being able to become a landlord.

buggy_boy

Lacherlich wrote: »

Hey. Thanks for the comments.

Well the property is in Birmingham city centre; house prices are expected to go up by 30% within the next few years due to HS2 and all of the redevelopment taking place in the city. It is right next to Snow hill train station (central). Thats the main reason for wanting to keep it.

Obviously these are the early stages of me looking into this so i could be wrong!

Property was £165k when bought; I reckon it could sell for £170k now; I have about £15k equity. So not a huge amount. Rental potential of about £800 - £900 per month. Current mortgage costs £380 a month. Obviously buy to let may be more expensive as for a larger amount c.£140k instead of the current £120k and whatever the interest rate is.

(After looking into it i dont think it would be achievable anyway as things stand; but my partner thought it may be worth him going on my mortgage too; putting some into it so within a year we own 25%; so then turning it into B2L is doable; and then we can buy the new place together) But again let me know if you think not such a great idea!

Birmingham also has lots of flats in the centre... Although it would seem a good candidate for a BTL, remember house prices can go up as well as down... The problem is your equity, most mortgage companies may allow you to let the property for a short time at a higher rate, but after that time you must go onto a BTL product, problem is you dont have anywhere near the amount of LTV for a BTL product.

As for the partner going n the mortgage, thats not a good idea for so many reasons if you split up....

Just think about it, basically almost all your equity would be gone with the extra stamp duty you will pay on the new place... Your figures are way too tight... Sell the flat, buy property together, being a landlord is not as easy as people say, I have 4 looking for a 5th and its basically a full-time job at times and they are relatively low yield but low hassle... In the last 3-4 months I have...

- Had to do forms for land registry to change over inherited property, including going to the land registry 3 times.
- Had one tenant move out.
- Had to do repairs and smarten that property, including fixing stairs and cistern.
- Done viewings to fine a new tenant
- Had to do legal letter for new landlord of inherited property
- Had to arrange repair of leaking shower
- Had to arrange repair of leaking roof
- Cooker was not heating so bought a new one, currys could not fit as socket was in the way, had to sort out electrician to move socket
- Had to sort our 3 gas safety certificates
- One tenant has split up so had to start new tenancy with just one of the two tenants with the other being guarantor
- Had to transfer a british gas cover to my name
- Renew a british gas cover (need to phone up again to get best deal)
- Renew an insurance (again need to look around to get best deal)
- re-register a deposit
- serve deposit documentation
- Arrange electrician to replace out of date fire alarms
- Do my taxes


Im sure there is also other bits that ive done that I have forgotten, my point is that its not an investment, you need to know your responsibilities and take them seriously.

Thrugelmir

Current Debt: £25,000 loan

Maybe an idea to settle this first before venturing into property investment.

Lacherlich

Hey

Yeah we're definitely a long way off at the moment; but realised yesterday that to make it a reality I need to start thinking about it now. It does sound like a resounding no even if it were feasible right now

Adding my partner to the mortgage is to increase the equity to make it possible in the future to change to BTL- the risk of splitting up still applies if we buy a new property together and I sell this place anyway? Adding him to the mortgage and him paying in an amount to match my deposit will mean we have around 15%; then by overpaying the mortgage for a year we can bring it up to 25%. (My debt is also being paid off over the next couple years)

So i think longer term we can get into a position to do it.... I guess the question then is if its worth it; and based on the feedback so far maybe not? There are apartments in the city centre but current demand far outstrips supply so I am not too worried about price dropping etc; and believe it would rent quite easily.

Ill have a think!

Lil_Me_2

I started renting my flat out when I moved in with my OH. Now we are looking to sell his and buy our own we don't need to pay the extra stamp duty as the new house is replacing my primary residence. So that's one way around it.

My first point of call was to speak to my lender to get consent to let, they agreed, putting the interest rate up 1%. When it came to remortgaging I struggled to find a lender who would lend under the buy to let as I was not named on another property, it wasn't impossible, but I certainly didn't get the best deal out there, probably cost me another 0.5% on the interest rate.