Cosmo
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Registered: 29th Mar 01
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I know a few people on here have buy to let mortgages so you might be able to help...
I was looking at moving out of my apartment and in to a house before the credit crunch hit, now things have settled, house prices are low and mortgage rates are good Im thinking of moving again.
Now when I was going to move orignally I was just going to sell the apartment and buy a house with a little mortgage, but now the apartment's value has dropped (only a little, Id still make a profit on what I paid) but the rentable value has shot up to about £950 a month. So it seems a good idea to me if I got a good rate fixed mortgage, hold on to it for a while bringing in top dollar rent then look to sell when the mortgage is up and the rates will no doubt be higher.
But...and I best going to a repayment type mortgage or just an interest only on the apartment? Id be getting a repayment (more than likely) on the house Id buy.
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J da Silva
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Do you still pay for the apartment or this all bought and paid for?
I would personally go for a repayment mortgage on your future new house as you'll get a good fixed rate at the moment if you have some capital to chuck down aswell as.
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Cosmo
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At the moment the apartment is all paid for and mortgage free. Id have to get a mortgage for about half its value though so I can release some money to put down on the new place. Would still leave me with about a 50% deposit (probably slightly less on the new place) on the properties though.
Looking quickly on those crappy mortgage calculators, a repayment mortgage would easily be covered by the rent with some to spare, an interest only would be a max of 2/3rds of the rent.
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J da Silva
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So without me continuing further, what are you inclined to do now you've done a bit of research?
My case is slightly different to what yours will be if you go ahead. Me and two other businessmen set up a rentals firm which aquire properties, but what I wouldn't accept any DSS, the place will just get wrecked.
[Edited on 06-07-2009 by J da Silva]
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Cosmo
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From just what Ive been reading, the most financial sense to me is to get a mortgage on them both (both with big deposits) then sit on the apartment with a decent rental income of close to a grand a month.
Id expect, hope, that in up to 5yrs time (given getting a good 5yrs fixed rate mortgage is possible at the moment) the apartment should of risen a fairly large amount in value.
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J da Silva
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I forgot to add, I wouldn't take a mortgage out on your apartment to put a deposit down on your new pad, you will need a 'safe' property if you plan on letting one out...
My own home is all paid for, I will take no loans out against it, if everything goes tits up and you get a tricky tennant who refuses to pay for a few weeks, whilst your waiting for your legal guy to sort things out you have to foot the bill etc..
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Cosmo
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I think my mind is made up on that part, my main thing Im wondering about is if on the rental property to go with interest only or repayment mortgage.
Id not make much per month on the rent as it would cover the mortgage, where as with an interest only Id make more per month.
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J da Silva
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quote:
Originally posted by Cosmo
From just what Ive been reading, the most financial sense to me is to get a mortgage on them both (both with big deposits) then sit on the apartment with a decent rental income of close to a grand a month.
Id expect, hope, that in up to 5yrs time (given getting a good 5yrs fixed rate mortgage is possible at the moment) the apartment should of risen a fairly large amount in value.
What I'd do, is don't get a mortgage on the flat, get someone in it, take your £1000 a month. A typical 3 bed town house may cost you £450-500 a month with a 10-15% deposit based on current rates from the major banks.
Not only would you have your monthly wage, your gaining a good sum from your tennant, which in turn you could pay off any extra off your mortgage on the new house.
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Danny P
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Registered: 20th Nov 02
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Cosmo you have too much money 
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J da Silva
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quote:
Originally posted by Cosmo
I think my mind is made up on that part, my main thing Im wondering about is if on the rental property to go with interest only or repayment mortgage.
Id not make much per month on the rent as it would cover the mortgage, where as with an interest only Id make more per month.
If you think that's the right move then you do that, I was just offering my views, on the flipside, a flat at a £1000 a month is only really going to attract a travelling businessman, maybe you won't get riff raff. But you may get a duo, they are a nightmare, two friends who chat about how good it would be to get a place and have all night parties, then when the newness wears thin they bicker and refuse to pay rent etc...
[Edited on 06-07-2009 by J da Silva]
[Edited on 06-07-2009 by J da Silva]
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Cosmo
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I did consider that, but round here you wont get much for less than £200k, and even at that price it'll be some shitty house. And Im not really perpared to drop down from living in my apartment to some shit tip so not to have a mortgage on one of them.
Given how relatively small the mortgage on the apartment will be, I could afford to pay it myself for a good 6 months straight if no one was in it for that amount of time.
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Cosmo
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quote:
Originally posted by J da Silva
If you think that's the right move then you do that, I was just offering my views, on the flipside, a flat at a £1000 a month is only really going to attract a travelling businessman, maybe you won't get riff raff. But you may get a duo, they are a nightmare, two friends who chat about how good it would be to get a place and have all night parties, then when the newness wears thin they bicket and refure to pay rent etc...
Yeah, obviously thats the main thing that worries me!
The vast majority in my apartments are young business couples (being that its central Manchester and obviously close to where they work), so I guess Im just going to have to be careful who rents it.
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Cosmo
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quote:
Originally posted by Danny P
Cosmo you have too much money
Not really, if I could do this without a mortgage then that would be too much (actually no it wouldnt).
Hopefully this'll be the first step in making a decent amount.
The other option is I sell the apartment, then split the money into however many 10-15% deposits and buy a load of lesser value buy to lets 
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J da Silva
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I can honestly say that if you do this right, and eventually go on to build enough cash to get them without needing a buy to let mortgage, you will be rolling in it within your first 5 properties.
My own personal setup is quite weird, I've got 6 houses with 2 other guys, but I also rent my old house out which was also paid for, my current house is all paid for but the bills are alot so the rent from my old house pays for my electric, gas etc... basically I eat for free.
[Edited on 06-07-2009 by J da Silva]
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Cosmo
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If Id of known, the apartment next door to mine was up for sale in December (as a repo, guy obviously couldnt afford the mortgage) and went for about £70k under the current market price. He then stuck it right back up and sold it, still under the current market price, for about a £50k profit in an 8wk turn around.
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J da Silva
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That's what I mean, we've done similar things, although repo's you mainly have to struggle with a management firm first, but most are keen to offload the place anyway.
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Cosmo
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The annoying thing is I was there the day they came round and took the property. The guy in it had done a runner with all his stuff so they changed all the locks and stuck up a sign with details if he wanted anything left inside.
I should of kept my eye out for it going up but just didnt think 
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jrsteeve
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Registered: 3rd Apr 02
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If you're intending to sell the flat then just take interest only. Repayment would be beneficial on the new place with the intention of having bought it outright before retiring. There's no benefit to you for repaying the buy to let, and the monthly payments will be higher so you'll actually be losing out on extra pocket money.
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Cosmo
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Yeah, thats my thinking in terms of bringing in an income off it per month, but then again a repayment would give me more profit when I do happen to come to sell it!
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MarkM
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Registered: 11th Apr 01
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It's like a countdown conundrum...
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Cosmo
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Where is that annoying maths bitch when you need her, she is out of a job now so can work this all out for me.
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Nath
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Registered: 3rd Apr 02
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Nice of your Dad to buy you a new house.
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Cosmo
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quote:
Originally posted by Nath
Nice of your Dad to buy you a new house.
Yeah, that mortgage he is giving me is amazing
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J da Silva
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Ownage.
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jrsteeve
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Over 5 years or so i doubt there'd be much difference between the two. Just depends whether you want to reap the rewards now or in 5 years.
All of mine are on interest only as they're short-ish term investments. When i finally grow up and buy a house, then i'll take out a repayment mortgage. Speak to an IFA/your bank to see which they'd recommend but obviously they could be biased either way depending on the fee they earn.
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