Buy to let mortgage with main house protection.

mrstingy2022

https://forums.moneysavingexpert.com/discussion/comment/81905937#Comment_81905937

i have no experience being a landloard but should it be a show stopper?

I heard its more challenging money from renting but on the other hand if things go ok it is passive income and apart from the rent the property might rise in value. Please feel free to comment your honest thoughts and advice if you have any

sheramber

https://forums.moneysavingexpert.com/discussion/comment/81906202#Comment_81906202

IF is the crucial point.

born_again

https://forums.moneysavingexpert.com/discussion/comment/81906202#Comment_81906202

I would suggest you have a look at the

The Renters' Rights Act 2025

If you have no experience of renting & engage with people that have experience via the many forums out there for them.

saajan_12

https://forums.moneysavingexpert.com/discussion/6657604/buy-to-let-mortgage-with-main-house-protection

https://forums.moneysavingexpert.com/discussion/comment/81905854#Comment_81905854

Simplest is to have the buy to let mortgage secured on the rental property. That way if you failed to pay the mortgage and they repossessed, it would be the rental property they repossessed. 

…

By securing the mortgage on the rental property, yes they would repossess the rental property FIRST, but if there was still a shortfall they would claim that from OP whether that's from savings or a charge on the main home, etc.

Whereas if the mortgage was secured on the main home, if it got close to a repossession the OP could sell the rental and pay off the mortgage.

So yes the main home is a little safer for longer, but its not a 100% guarantee as the OP is seeking.

@silvercar thanks for reply. I heard that LTD is the only way to make profit from the rental as it allows much more deductions. Do you reckon all banks always require personal quarantee on the LTD (including my main home) which as you mentioned is pointless? i thought the point of LTD is to limit the risk to the company. As a next step shall i contact several banks to find out?

Anybody working in the bank to comment?

Regards

Not the only way - with an LTD while there are more deductions, you could end up paying tax twice on the profit element (corporation tax and then dividend tax to extract the money from the company to your own account), plus company filings and accounts, etc.

Depends on your current and future tax bands - eg if you'll be paying less tax in future, you could wait and draw the money then, meaning you pay less tax. If not eg if you have a lot of passive investments, then you could be paying more tax with an LTD company.

The personal guarantee is something youd need to look into with the particular lender. In theory their worry would be you could jsut close the company and if the property value drops or is expensive to repossess they don't have anyone to chase for the shortfall.

dinosaur66

me personally i would not go your route

i would leave the equity in your own house that you live in

buy to let with a 25% deposit is a route i would not go down

buying outright and renting is a good profit earner

equity wise yes houses get a healthy return if left over 20 years and you keep them until you retire and pay 18% capital gains

tenants you get to pick who you want in todays market i have young familys with children to old age pensioners

advice already has been given about areas to buy in and what type of property / i concur with what they said

landlord fees

stamp duty/ a buy to let mortgage interest only i think its approx 7.7% at the moment not fixed and about 4% fixed with fees to pay on top so higher than a standard mortgage /

so 200k property as a template working out your costs

50k deposit

11.5k stamp duty

1.5k solicitor

£1500 mortage arrangement fee

£500 a month interest to pay

£1100 month rent

£130 month estate agent fees

insurance £240

£100 boiler cert

£200 eicr only once every 5 years

£1500 slush fund a year for repairs

epc i would only buy a C if buying today which would make the house in all probabilty turn key

200k also means midlands to north england as more bedrooms equals more rent and 200k buys you maybe jaywick / few seaside towns in kent / i only know weymouth /bournemouth on the south coast / i have always lived in london /essex

10% plus vat estate agent fees

22% hmrc profit fees as of next year

landlord license except london and scotland only a few other towns have them that i am aware of

house maintence fees most common call out is boiler /fences/windows/cookers /kitchen cabinets

one tip when renting look for gardens that have hardly any maintence required at all and i always look for something with kerb appeal that i would live in myself as they always are easy to sell when time comes.

your 200k property in 25 years time depending on area should be worth 400k plus so 33k tax to pay allowing for 18% to still be the rate and 3k relief

just a template to work from

_Penny_Dreadful

What’s the concern with negative equity and how are you defining negative equity?

When you owe more on the mortgage than you can sell the property for, that’s negative equity. Should you fall into negative equity the lender doesn’t do anything unless you fall into arrears, same as those in arrears who have positive equity, and then you can potentially face bankruptcy.

Negative equity isn’t, in my mind, the worst thing that could happen to a landlord. Winding up with a criminal conviction because you haven’t got a required licence or being hit with a rent repayment order would be worse.

UnsureAboutthis

https://forums.moneysavingexpert.com/discussion/comment/81905854#Comment_81905854

I just want to add, talking to a poster on another forum, the bit about BTL "requiring a 30% deposit usually." "That is not accurate, as it's often 25%; usually it is more accurate.

.

H

UnsureAboutthis

Any decison OP?