Saving a deposit for a second home

Newheight13

Hi and Happy New Year  all! Wishing you health to your and your families. 

Currently have around 100k equity in the flat we live in and plan to save £1500 a month over the next 2 years towards a house that we much need. 

Should we put it into our current mortgage when when we remortgage and use the equity release option in 2 years or just keep it separate so you think?

Thanks 

Schwarzwald

Whats the interest rate on the mortgage and for how long js it fixed?

Keep_pedalling

Second home suggests you will be keeping the flat when you buy your new place. Are you planning to do that?

Newheight13

Remortgage is due in July so was going to do it over 5 years at around 2k a month and then either sell in 2 years or rent out pending on market conditions,  as all to risky right now. Just wasn’t sure whether less hassle to save as cash in case we go down the BTL route. 

propertyrental

Newheight13 said:

Remortgage is due in July so was going to do it over 5 years at around 2k a month and then either sell in 2 years or rent out pending on market conditions,  ...

Schwarzwald said:

Whats the interest rate on the mortgage and for how long js it fixed?

We can't do the maths without the figures!

Newheight13

Sorry. 4.5% over 5 years 

dimbo61

Decisions decisions ?
Why do you want to be a Landlord ?

propertyrental

Newheight13 said:

 plan to save £1500 a month over the next 2 years towards a house that we much need. 

Should we put it into our current mortgage when when we remortgage and use the equity release option in 2 years or just keep it separate so you think?

Sorry. 4.5% over 5 years 

Can you achieve 4.5% income (post tax if relevant) if you 'keep it separate - be that in a savings account or investments?

either sell in 2 years or rent out pending on market conditions,  as all to risky right now. Just wasn’t sure whether less hassle to save as cash in case we go down the BTL route. 

Have you done the BTL maths? Additional SDLT? Tenancy set-up costs? Ongoing costs? Realistic income potential (@ 10 months rent pa)? Risk factors? Tax?...... etc etc

AlexMac

dimbo61 said:

Decisions decisions ?
Why do you want to be a Landlord ?

What dimbo said! 

Not sure I follow the  whole thread above, let alone the maths, but assuming by "second home" you mean a BTL, I'd offer the anecdotal experience that the two Buy to Lets we've owned have been trouble-free, and provided helpful modest income of about 4-5% gross (on current, updated values); or about 3-4% net of tax and costs.

Letting ain't for the lazy, however.  We or the agents always vetted tenants thoroughly and although I then managed the letting myself to save fees, we didn't stint; treated tenants right, replaced fridges, washing machines and boilers the moment they broke, and ensured repairs were done promptly.  We were rewarded by them stumping up the rent on time and staying for long enough to minimise voids; none of the damage, debt or drug-farming which other amateur landlords report!

The real benefit of property ownership has,however, been phenomenal capital gains, both on the BtLs and our homes.

But I'm far less certain that buying now will guarantee long term capital appreciation. We've owned a succession of houses for almost 50 years, and the first Buy to Let for over 25.  So despite the property price crashes of  the mid 1980s and late 'noughties, when values dropped in some areas by 25%, we've seen unbelievable house price growth; the £10 wreck of a home we bought in then slummy Sarf London in 1975 is now probably worth  north of a Million, the first BTL has gone up six or seven times its 1996 value and the second has doubled in value since 2012.

But I can't see that happening in the next ten years or so; so unless you're in it for the long-term...?

Newheight13

Hi all, thank you for the useful insites above. Don’t particularly want to be a landlord as I know it’s a different ball game now and a lot to consider with the taxes and new rules.

Similar properties have been snapped up the same week of going on the market, easily achieving £1100 PCM and it also has a garage that I’ve rented out for 2 years at £200 PCM so it seems like a good investment despite the hassle that goes with it. It was purchased for 130k 2 years ago and spent around 30k doing it up, now valued at 215k. Maybe we will just sell it but o fee like we are the king away an opportunity. Could. be very wrong I know.