Banks pull the plug on buy-to-let landlords

ManAtHome

UK007BullDog wrote: »

The only people with major big job losses are those connected with mortgages. They are skilled enough to find other jobs.

But what can bring us to our knees is this food shortage world wide.

Well to take the second point first - the constant ratcheting-up of "essentials" prices won't help a lot.

And the first point - maybe the mortgage/finance peeps first, but retail won't be that far behind (especially now the Czechs and Poles who export money or save in quids have had a 25%+ pay cut in the last year). And as most of the poundland e-CON is based on people flogging imported stuff/properdee to each other and relying on finance/credit/debt to finance it... errrm, where next..?

fc123

Gorgeous_George wrote: »

It's called tax planning old boy.

GG

You either pay taxes (to benefit All) OR interest (to benefit The Bank).

Generali

fc123 wrote: »

You either pay taxes (to benefit All) OR interest (to benefit The Bank).

The bank will pay tax on their profits and employ people. The latter is a good thing at least.

Gorgeous_George

fc123 wrote: »

You either pay taxes (to benefit All) OR interest (to benefit The Bank).

If you believe paying taxes benefits all then the argument is lost.

GG

Gorgeous_George

dolcevita wrote: »

what?

borrowing more money on a depreciating asset just to stick it in the bank?

that is not the action of a serious investor or someone who knows about the property market.

idiot is the word that springs to mind.

Not something I would do but it can make sense.

Say you had £1M worth of BTL property with an average LTV of 50%.

Increase the LTV to 85% gives you £350K to invest in safe places. If house prices crash, you have funds available to buy cheaply for cash.

GG

fc123

Gorgeous_George wrote: »

If you believe paying taxes benefits all then the argument is lost.

GG

OMG and you're the socialist...don't you have faith in the current govt.? They rake it in and spend it wisely......................not.:rolleyes:

IveSeenTheLight

Gorgeous_George wrote: »

My BR+0.89% life of mortgage tracker looks better every day.
GG

Good rate.
I have a fixed rate of 5.64% to run for another 3 1/2 years which I am also very happy with.
So for now, we have similar mortgage deals, but of course you will have a better deal if the BoE drops rates further.

IveSeenTheLight

Gorgeous_George wrote: »

Not something I would do but it can make sense.

Say you had £1M worth of BTL property with an average LTV of 50%.

Increase the LTV to 85% gives you £350K to invest in safe places. If house prices crash, you have funds available to buy cheaply for cash.

GG

I have a slightly similar plan but slightly different.
I actively reduce the outstanding mortgage to less than 50%, then when I have sufficient deposit (20%), I would be prepared to invest in another BTL (80% LTV) and then actively reduce that mortgage to below 50% before I start the cycle again.

I always have a repayment mortgage so the LTV (or more precisely the loan to mortgage) reduces every month.
Overall, my LTV ratio is 46.5%, however individually they are 39% and 57%

Of course, I also ensure each property is financially viable taking into account associated costs and void periods. But with each new property, the ability to reduce the new mortgage becomes easier due to profits received from the other properties.

At present I am still an amature BTL LL, however so far the investment has went very well and I usually manage to have long term renters (I market just under the market rate and ensure any issues are resolved immediately. Happy tenants, make a happy landlord )

I will continue to be conservative with my aquisitions and maintain a good healthy LTV ratio. It's important to understand that when you buy a property as an investment, you do so with a long term strategy and not hope for some short term gains

nrsql

>> I actively reduce the outstanding mortgage to less than 50%, then when I have sufficient deposit (20%), I would be prepared to invest in another BTL (80% LTV) and then actively reduce that mortgage to below 50% before I start the cycle again.

Notice how that means that you don't have to worry about a price crash (in fact it's a good thing for your next purchase).
All you care about is rental income and mortgage rate.
Problem comes when people buy and run at a loss relying on capital growth - mugs game with something this illiquid.

MissMoneypenny

Gorgeous_George wrote: »

Not something I would do but it can make sense.

Say you had £1M worth of BTL property with an average LTV of 50%.

Increase the LTV to 85% gives you £350K to invest in safe places. If house prices crash, you have funds available to buy cheaply for cash.

GG

I wonder if the UK tax laws on BTLs will follow the Australians? They only give tax breaks on the original loan.