Mortgage broker - ask me anything

K_S

@TheMightyShowerHead

3. Sorry, I thought that both were rented out and you lived in service accomodation. If it's not already rented out then only 1-2 lenders will potentially consider future projected rental income so that may not be an option.

4. It would be a BTL capital raise remortgage.

I'm not entirely clear on your question but yes, you could potentially do a combi of raising cash on your rental property/properties and using rental income to boost borrowing. But tbh, based on the numbers you've given and looking to buy a 300-350k property, you should have plenty of ways to get where you need to in a cost-effective manner.

TheMightyShowerHead

@K_S

Yeah, I only bought P2 to avoid living in service accomodation. 

I guess my question was which mortgage would be best to clear if I were going for the "hybrid" option. I assume the more valuable house with the smaller mortgage? 

But I appreciate the reassurance that I'll have options when the time comes. Makes committing to leave marginally less daunting! 

Are you connected to the mortgage broker company with your initials or is that just coincidence? I only ask as they helped me secure the mortgage on P2.

TheMightyShowerHead

@getmore4less

I will hopefully (fingers crossed) have £110 in cash by mid next year. Assuming wages stay the same and no ridiculous unforseen expenses. 

I'm probably thinking pay off P1. Take equity out of that. Leave P2 mortgaged. That should give me ~£200k deposit and a decent LTV for a mortgage. 

Agreed, the SDLT will sting a bit but the rent will pay for that in a year or so, which is why it doesn't make financial sense to sell up when I've already paid almost 5k on P2 and 2.5k on P1. 

So hopefully in around 3 or 4 years I will be pretty much mortgage neutral. 

Thanks for your thoughts. It's good to hear from other people that its not all just wishful thinking. 

getmore4less

TheMightyShowerHead said:

@getmore4less

I will hopefully (fingers crossed) have £110 in cash by mid next year. Assuming wages stay the same and no ridiculous unforseen expenses. 

I'm probably thinking pay off P1. Take equity out of that. Leave P2 mortgaged. That should give me ~£200k deposit and a decent LTV for a mortgage. 

Agreed, the SDLT will sting a bit but the rent will pay for that in a year or so, which is why it doesn't make financial sense to sell up when I've already paid almost 5k on P2 and 2.5k on P1. 

So hopefully in around 3 or 4 years I will be pretty much mortgage neutral. 

Thanks for your thoughts. It's good to hear from other people that its not all just wishful thinking. 

4% gross yield on P1(less for the higher valuation, more for cash out value after expences) is quite low.
What gross yield are you looking at for p2.

yield on purchase costs should be better but it is 

It's going to take a while to be getting any return.

Crunch the letting business numbers to see how long it really going to take.
with £38k+two rental incomes(£11,400+£x,000 you are going to hitting 40% tax

TheMightyShowerHead

getmore4less said:

TheMightyShowerHead said:

@getmore4less

I will hopefully (fingers crossed) have £110 in cash by mid next year. Assuming wages stay the same and no ridiculous unforseen expenses. 

I'm probably thinking pay off P1. Take equity out of that. Leave P2 mortgaged. That should give me ~£200k deposit and a decent LTV for a mortgage. 

Agreed, the SDLT will sting a bit but the rent will pay for that in a year or so, which is why it doesn't make financial sense to sell up when I've already paid almost 5k on P2 and 2.5k on P1. 

So hopefully in around 3 or 4 years I will be pretty much mortgage neutral. 

Thanks for your thoughts. It's good to hear from other people that its not all just wishful thinking. 

4% gross yield on P1(less for the higher valuation, more for cash out value after expences) is quite low.
What gross yield are you looking at for p2.

yield on purchase costs should be better but it is 

It's going to take a while to be getting any return.

Crunch the letting business numbers to see how long it really going to take.
with £38k+two rental incomes(£11,400+£x,000 you are going to hitting 40% tax

The purchase price of P1 was £215. So with a decent buffer of costs etc the yeild is about 5%. Although I agree, on current prices it's nothing spectacular. I didn't buy the house to let though, so I'm just working with what I've got and the price is about right for the area. I could probably get more but tennant longevity is better than a void period. 

Rental yeild for P2 even at current price would be easily 5.1% at a conservative £750/m rent. 

The 40% tax is going to be a bit of a pain, but I'm hoping to offset that with interest payments/upkeep/management fees. Although conceivably I may still have a small liability at 40%. 

getmore4less

TheMightyShowerHead said:

getmore4less said:

TheMightyShowerHead said:

@getmore4less

I will hopefully (fingers crossed) have £110 in cash by mid next year. Assuming wages stay the same and no ridiculous unforseen expenses. 

I'm probably thinking pay off P1. Take equity out of that. Leave P2 mortgaged. That should give me ~£200k deposit and a decent LTV for a mortgage. 

Agreed, the SDLT will sting a bit but the rent will pay for that in a year or so, which is why it doesn't make financial sense to sell up when I've already paid almost 5k on P2 and 2.5k on P1. 

So hopefully in around 3 or 4 years I will be pretty much mortgage neutral. 

Thanks for your thoughts. It's good to hear from other people that its not all just wishful thinking. 

4% gross yield on P1(less for the higher valuation, more for cash out value after expences) is quite low.
What gross yield are you looking at for p2.

yield on purchase costs should be better but it is 

It's going to take a while to be getting any return.

Crunch the letting business numbers to see how long it really going to take.
with £38k+two rental incomes(£11,400+£x,000 you are going to hitting 40% tax

The purchase price of P1 was £215. So with a decent buffer of costs etc the yeild is about 5%. Although I agree, on current prices it's nothing spectacular. I didn't buy the house to let though, so I'm just working with what I've got and the price is about right for the area. I could probably get more but tennant longevity is better than a void period. 

Rental yeild for P2 even at current price would be easily 5.1% at a conservative £750/m rent. 

The 40% tax is going to be a bit of a pain, but I'm hoping to offset that with interest payments/upkeep/management fees. Although conceivably I may still have a small liability at 40%. 

40% relief on interest went ages ago.

TheMightyShowerHead

getmore4less said:

TheMightyShowerHead said:

getmore4less said:

TheMightyShowerHead said:

@getmore4less

I will hopefully (fingers crossed) have £110 in cash by mid next year. Assuming wages stay the same and no ridiculous unforseen expenses. 

I'm probably thinking pay off P1. Take equity out of that. Leave P2 mortgaged. That should give me ~£200k deposit and a decent LTV for a mortgage. 

Agreed, the SDLT will sting a bit but the rent will pay for that in a year or so, which is why it doesn't make financial sense to sell up when I've already paid almost 5k on P2 and 2.5k on P1. 

So hopefully in around 3 or 4 years I will be pretty much mortgage neutral. 

Thanks for your thoughts. It's good to hear from other people that its not all just wishful thinking. 

4% gross yield on P1(less for the higher valuation, more for cash out value after expences) is quite low.
What gross yield are you looking at for p2.

yield on purchase costs should be better but it is 

It's going to take a while to be getting any return.

Crunch the letting business numbers to see how long it really going to take.
with £38k+two rental incomes(£11,400+£x,000 you are going to hitting 40% tax

The purchase price of P1 was £215. So with a decent buffer of costs etc the yeild is about 5%. Although I agree, on current prices it's nothing spectacular. I didn't buy the house to let though, so I'm just working with what I've got and the price is about right for the area. I could probably get more but tennant longevity is better than a void period. 

Rental yeild for P2 even at current price would be easily 5.1% at a conservative £750/m rent. 

The 40% tax is going to be a bit of a pain, but I'm hoping to offset that with interest payments/upkeep/management fees. Although conceivably I may still have a small liability at 40%. 

40% relief on interest went ages ago.

Using a quick and dirty online calculator I'm getting results that will give me a tax bill of around 4.5k leaving me with post tax income of 9.9k after expenses. Obviously depending on interest rates and what options I take to buy my 3rd house I'll still be more of less mortgage neutral. 

I still think it will be worth keeping the houses as when I semi-retire I'll be earning less so my tax burden won't be so big. Or do you think I'm setting up to fail?

MissNinja

Hello,

My partner and I are thinking of buying this year. I'd like to know for sure how much we'd be allowed to get by asking a broker. I wouldn't want them to think we want them to do the work for free if we eventually postpone our home search for a bit.

The big question is: is it acceptable to just ask for affordability with a broker for free for now? (I wouldn't mind reusing them for the actual mortgage application whenever it comes) I asked a few friends but no one I know have bought recently.

Should we just do a DIP with an online one?

I've checked the intermediaries calculators, they all give us the same amount (however it doesn't take into account that I'm in one of those 'safe' jobs)

Thanks in advance.

K_S

MissNinja said:

Hello,

My partner and I are thinking of buying this year. I'd like to know for sure how much we'd be allowed to get by asking a broker. I wouldn't want them to think we want them to do the work for free if we eventually postpone our home search for a bit.

The big question is: is it acceptable to just ask for affordability with a broker for free for now? (I wouldn't mind reusing them for the actual mortgage application whenever it comes) I asked a few friends but no one I know have bought recently.

Should we just do a DIP with an online one?

I've checked the intermediaries calculators, they all give us the same amount (however it doesn't take into account that I'm in one of those 'safe' jobs)

Thanks in advance.

@MissNinja It isn't clear to me exactly what you're trying to achieve here but to answer your question, in theory any broker should give you a realistic idea of your potential max borrowing figure at no cost. Just use one of the many recommended on the MSE broker page here 
https://www.moneysavingexpert.com/mortgages/best-mortgages-cashback/#step3

For the purposes of max borrowing, with regard to the kind of role, a 'safe' PAYE role (eg: civil servant) is treated the same as PAYE role in (say) Pizza Express. If both jobs pay a 40k basic your borrowing options will be the same.

If you are a qualified professional (clinician, engineer, accountant, lawyer, etc etc) then that opens up a few more high income-multiple borrowing options.

Good luck!

MissNinja

Thank you @K_S , sorry I wasn't clear, you did answer the question though!

I'll look into the qualified professional mortgages as I am one of those.