Will BTL work in 2019?

onelifeliveit · 15 January 2019 at 2:02PM

Hi, I could really do with some sensible advise. I have been left 120K. The person who left it to me was a real entrepreneur and would want me to do something clever with the money. From my research it would seem the sensible thing to do would be to pay off the mortgage debt......but I am wondering if there is some way I can use this money to generate an income and thereby pay of my mortgage early with extra monthly payments. The onlyway I have found of doing this is by buying two properties on an interest only mortgage and renting them out. My question please : do you think this is the best way to use this money to create an income and pay of my mortgage early and if so will BTL still generate income in 2019 with all the extra tax penalties. Thank you.

seven-day-weekend · 15 January 2019 at 2:45PM

My BTL works well, but I paid cash for it. Whilst I appreciate that not using your own money might be a clever thing to do, I did not want to find myself unable to pay off the capital in ten years' time . You might say that I could do that by selling the property, but prices can go down as well as up.

Two mortgages is, imho, pretty risky unless you intend keeping the £120k intact and using that to pay off the capital.

Just mho.

onelifeliveit · 15 January 2019 at 3:11PM

Thank you for your opinion, very much appreciated. I need to sit down and do the Maths - the trouble is I am always too busy working to provide for the family to find the time to research properly. I have been trying to find 'an expert' who I can make a one off payment to for good advise but it just seems this is not possible - everyone wants to sell you 'products'. Any ideas on who I could go to on that? You are right, having two is a risk but I was hoping over a 6 to 10 year period the houses would go up....... but then that is what everyone who buys on interest only hopes for ! Thank you for taking the time to reply

seven-day-weekend · 15 January 2019 at 3:22PM

onelifeliveit wrote: »

Thank you for your opinion, very much appreciated. I need to sit down and do the Maths - the trouble is I am always too busy working to provide for the family to find the time to research properly. I have been trying to find 'an expert' who I can make a one off payment to for good advise but it just seems this is not possible - everyone wants to sell you 'products'. Any ideas on who I could go to on that? You are right, having two is a risk but I was hoping over a 6 to 10 year period the houses would go up....... but then that is what everyone who buys on interest only hopes for ! Thank you for taking the time to reply

An Independent Financial Advisor?

Savvy_Sue · 15 January 2019 at 4:35PM

Yup, our IFA suggested we consider BTL as part of our future-proofing. We decided against it: have enough trouble keeping one home together, never mind trying to get another pristine to rent out.

The early stages will take time, and that seems to be something you're short of.

I'd give some thought to what you'd actually LIKE to do. I mean, if you LIKE doing up houses / flats, then this could be great, but you may have some other passion.

And another thought is that you could presumably partly pay off your mortgage, and see if that would enable you to reduce your hours, and give you time for your passion. I'd say that was pretty creative ...

onelifeliveit · 15 January 2019 at 4:58PM

Thank you - very interesting that you managed to find anIFA that recommended you consider BTL as unless he was going to tr to sell you a mortgage as opposed to a 'financial product' he would not be making any % on this. Where did you look to find one who was completely independent please?

I do like renovating houses - done it in the past and it has been profitable. Had not even considered going part time. I love my job but work long long hours so going part time is something I will certainly look into. Thank you, very creative.

Savvy_Sue · 15 January 2019 at 5:12PM

onelifeliveit wrote: »

Thank you - very interesting that you managed to find anIFA that recommended you consider BTL as unless he was going to tr to sell you a mortgage as opposed to a 'financial product' he would not be making any % on this. Where did you look to find one who was completely independent please?

Well, to be fair, it was an IFA through whom we'd previously got a mortgage, but this was their pensions specialist suggesting it, and yes, they'd have been hoping to get the mortgage business from us, but financially I could see why he thought it would make sense. It just wasn't for us.

onelifeliveit wrote: »

I do like renovating houses - done it in the past and it has been profitable. Had not even considered going part time. I love my job but work long long hours so going part time is something I will certainly look into. Thank you, very creative.

:rotfl: And that was just a 'top of the head' suggestion ...

missile · 16 January 2019 at 11:19AM

BTL is not easy money, it can be hard work for very little return. In my experience it is very difficult to tell who will be a good tenant and who will be a nightmare.

If you are struggling to find time to investigate, where will you find time to manage two rental properties?

Twoplus · 16 January 2019 at 11:30AM

I have a house I have been renting out for 7 years though an agent. A lot depends on tenants whether it's a profitable option. Over the years most of my tenants have been ok.
However I had one family in for just over a year, they managed to block the drains twice, the letting agent had to send a plumber round multiple times to a leaking radiator (think they were allowing their children to climb on it). When they left owing 2 months rent I found they had broken 2 window handles, 1 door handle, several light fittings and the whole house was filthy. It was another 3 months before I had another tenant during which time I needed to pay 50%council tax. You need to have the money available for periods like this and be aware it's not without risk.
Also consider interest rates may go up and house prices down.

Pennywise · 16 January 2019 at 12:17PM

onelifeliveit wrote: »

will BTL still generate income in 2019 with all the extra tax penalties

Depends on your personal tax position. It's higher rate taxpayers who'll be hit hardest, and the new rules drag more people into the higher rate threshold.

If your income is low, say, under £30k-£35k, then you're unlikely to get dragged into h/r tax so the new rules on interest tax relief won't hit you. (depends on how much you'd be borrowing and the interest payable each year of course).

seven-day-weekend · 16 January 2019 at 3:05PM

onelifeliveit wrote: »

Thank you - very interesting that you managed to find anIFA that recommended you consider BTL as unless he was going to tr to sell you a mortgage as opposed to a 'financial product' he would not be making any % on this. Where did you look to find one who was completely independent please?

I do like renovating houses - done it in the past and it has been profitable. Had not even considered going part time. I love my job but work long long hours so going part time is something I will certainly look into. Thank you, very creative.

I didn't see an IFA.

However, there is a directory of Independent Financial Advisors.

Here is one :

https://localadvisor.localfinancialadvice.co.uk/local-advisor/?location=england&keyword=%2Bifa%20%2Bengland&matchtype=b&network=g&device=c&location=1007249&creative=249995052400&campaignid=1054942688&adgroupid=54568730369&adposition=1t1&source=googlepaid&campaign=Region%20-%20England%20-%20BMM&gclid=CjwKCAiAyfvhBRBsEiwAe2t_i0UZZaWahE6b4Orcls_Tw5YdJXoFDZseSHy9ocqkPb6etpQZbWrIZBoCL4sQAvD_BwE

Will BTL work in 2019?

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