Investing in property using equity from existing property

Ry12335

Hi all

As the title states, I’m thinking of investing into property, possibly next year. My current house is currently worth between £165k-£170k going off recent valuations with a mortgage off £70k. I hoping to release equity of around £50k with the intention of buying a property no more than £45k. I know this is low and is unrealistic in most parts of the country but I’m northern .
Circumstances:
Employed- £25k+ plus bonuses
Wife part time- £8k
Mortgage £450 (currently overpaying to £600)
Home owner loan quote- £280 per month- £50k
Debts approx £2k
Savings £0

HSBC have given decision in principle of borrowing to be £114k based on my property valuation of £170k. I’m guessing this is including my £70k mortgage ??? Which would mean borrowing a maximum of £44k at the minute.
The idea is to be in a position to buy a property this time next year by saving £8k+ and clearing all debt. will be doing majority of any building work myself (I’m also a roofer) with the idea to re-sell or rental depending on situation.

Any advice appreciated

FestiveJoy

Ry12335 wrote: »

Hi all

As the title states, I’m thinking of investing into property, possibly next year. My current house is currently worth between £165k-£170k going off recent valuations with a mortgage off £70k. I hoping to release equity of around £50k with the intention of buying a property no more than £45k. I know this is low and is unrealistic in most parts of the country but I’m northern .
Circumstances:
Employed- £25k+ plus bonuses
Wife part time- £8k
Mortgage £450 (currently overpaying to £600)
Home owner loan quote- £280 per month- £50k
Debts approx £2k
Savings £0

HSBC have given decision in principle of borrowing to be £114k based on my property valuation of £170k. I’m guessing this is including my £70k mortgage ??? Which would mean borrowing a maximum of £44k at the minute.
The idea is to be in a position to buy a property this time next year by saving £8k+ and clearing all debt. will be doing majority of any building work myself (I’m also a roofer) with the idea to re-sell or rental depending on situation.

Any advice appreciated

Follow your dreams ...

:xmastree::xmastree::xmastree::xmassign:

Mrs_pbradley936

Well since George Osborne altered the tax laws for investment property it is not quite as good as it was.

With low interest rates it is still better than a lot of other things but just make sure that any advice you take or articles you read are current rather than historic.

SmashedAvacado

i am not a fan of the borrow to invest approach - it used to work with property but given the changes in tax laws i think buy to let makes more sense if you can pay for it outright and have no other debt. Unless of course you believe that you are likely to make a substantial capital gain - which given where the market is, is not particularly likely.

I am all for investing, but i would get my pension contributions maxed out if you are on a low mortgage rate which will probably give you a better return and be more sensible for retirement.

Thrugelmir

Ry12335 wrote: »

HSBC have given decision in principle of borrowing to be £114k based on my property valuation of £170k. I’m guessing this is including my £70k mortgage ??? Which would mean borrowing a maximum of £44k at the minute.

Potential amount a lender will advance is based on affordability. Do HSBC know the purpose of the release of equity?

Ry12335

I did it online and Additional property was the option I chose

[Deleted User]

Remember that the sort of property you are thinking of buying could need some extensive refurb.., boiler replacement, plastering, etc. You could easily need to pay another £20k. Or more. Then (it is appearing on here more and more) if the refurb takes longer than expected you can incur double council tax costs at a time you can least afford it because the house is empty.

You could get lucky and buy a place that just needs a lick of paint, new kitchen maybe, but its less likely at this price. There's usually a reason houses are so cheap. You will need to be very good at assessing rental or sell value (and look for a place that isn't the bottom of the heap in terms of both as low cost rentals will attract more undesirable tenants - do you know how to select reliable tenants if you decide to rent out? Do you know what a LL's responsibilities are?)

need_an_answer

You are going to buy a property that is cheap and in need of cosmetic work yet you appear to have no savings.

Whilst I understand you say you will do the work yourself because you are a roofer how will you fund the renovation that is sure to go beyond just fixing the roof?

Exactly what can you get for your budget up north?
care to share any examples?

EDITED to add...Deanna took the words right out of my mouth.

Ry12335

need_an_answer wrote: »

You are going to buy a property that is cheap and in need of cosmetic work yet you appear to have no savings.

Whilst I understand you say you will do the work yourself because you are a roofer how will you fund the renovation that is sure to go beyond just fixing the roof?

Exactly what can you get for your budget up north?
care to share any examples?

EDITED to add...Deanna took the words right out of my mouth.

Roofing is my trade but I’ve been known to pick up a paint brush from time to time
In all seriousness tho i have friends and family in all trades I won’t be involved in.... plumbing electrics etc.
As Said about the savings I will have approx £8k+plus next year

[Deleted User]

Once tarted up how much do you expect to sell the property for? What’s the ceiling price for a property of the type you will buy in the street you will buy?

need_an_answer

Ry12335 wrote: »

Roofing is my trade but I’ve been known to pick up a paint brush from time to time
In all seriousness tho i have friends and family in all trades I won’t be involved in.... plumbing electrics etc.
As Said about the savings I will have approx £8k+plus next year

OK getting friends and family to do the work is always helpful but they don't buy the new kitchen,carpets,pastering,electrics,decorating,bathroom ,heating,plumbing etc....

Lovely to hear that you'll have £8k savings next year...just don't understand if its that easy to save the best part of £700 per month on the 2 salaries you've quoted then why didn't you save £8k this year?

I've been known to pick up a paintbrush too...but as an established LL I also know you need a little more behind you than you your current business plan might suggest.