[Finance] Buy to Let Mortgages

Shropshire Seagull · Mar 11, 2018

Dale Jasper said:
You're a brave man entering btl right now . Most landlords are getting out

I would agree with the first sentence [for the private landlord - but not limited companies].
For the second [getting out] statement, even though the loss of mortgage interest against profit being phased out over next 3 years, this hasn't put me off holding on to my BTLs - I'm not looking to get out any time soon. I see my BTL as being part of my pension income soon, especially if I want to retire before being eligible for the state pension.

But defo not currently looking at any additional BTL just now.

DJ NOBO · Mar 11, 2018

Shropshire Seagull said:
I would agree with the first sentence [for the private landlord - but not limited companies].
For the second [getting out] statement, even though the loss of mortgage interest against profit being phased out over next 3 years, this hasn't put me off holding on to my BTLs - I'm not looking to get out any time soon. I see my BTL as being part of my pension income soon, especially if I want to retire before being eligible for the state pension.

But defo not currently looking at any additional BTL just now.

That’s the thing , for those who bought a few years ago btl offers capital gain, and annual returns that aren’t as good as before but are still pretty good. For those coming in now, it’s nowhere near as lucrative. That said, given low interest rates etc , it might still be the best bet.
Glad to hear yours is still looking good. The one I’m selling needs work and has other problems which has pushed me towards getting rid. I’m letting out another one, that is newer , with far better returns even with tax changes. I’ll keep that hopefully for decades unless more kids come along and I need a bigger main house. Them pesky kids....

Blue3 · Mar 11, 2018

I would like to see buy to let end as a concept, Cap rental rates in line with Council rents, Limit banks to lending for mortgages to 2.5 and 1 times the wage for a couple, allow encourage local Councils to borrow to build for rent, simplify the planning process with a time limit, Central Government to plan build a couple of new garden cities roads and infrastructure

Renegade1 · Mar 11, 2018

Dale Jasper said:
Three biggest misconceptions about btl.

You will make shed loads of money - sorry, if you’re planning on getting into it now, you’re too late.
.

So what you are saying is that for example a house worth 300k today will be worth 300k in 10/15 years?

I remember an estate agent telling me 20 years ago property was dead.

Renegade1 · Mar 11, 2018

osgood said:
Well , Obviously im not saying that its JUST you that is the problem , merely that yourself ,and thousands of other like-minded folk arnt exactly helping todays younger generation , (by removing yet another property from what would have been available the younger generation of FTBs )
while the majority of our generation had the choice you mention , (cars clothing etc) OR purchase a large house , that choice is impossible for the majority of this present generation

Tell me how it would help young people to buy property if landlords stopped buying.

DJ NOBO · Mar 11, 2018

Renegade1 said:
So what you are saying is that for example a house worth 300k today will be worth 300k in 10/15 years?

I remember an estate agent telling me 20 years ago property was dead.

I wouldn't buy a house at the moment expecting strong capital growth (taking inflation into account) anytime soon. Like your estate agent , I might be proved wrong . Doubt it though .

Renegade1 · Mar 11, 2018

If there were better alternatives than investing in property then I'm sure the many many landlords in this country would invest money elsewhere.After all property can be a hassle.The whole process of looking for property then the buying process.Doing the place up if it needs it.Finding good tenants who don't screw you or trash the property.If stocks and shares were safe and gave the same returns then only an idiot would invest in property.

Renegade1 · Mar 11, 2018

Dale Jasper said:
I wouldn't buy a house at the moment expecting strong capital growth (taking inflation into account) anytime soon. Like your estate agent , I might be proved wrong . Doubt it though .

So you are saying a house worth 300k will be worth the same in 10/15 years?
I will guess it will be worth around 500k.

DJ NOBO · Mar 11, 2018

Renegade1 said:
So you are saying a house worth 300k will be worth the same in 10/15 years?
I will guess it will be worth around 500k.

Dude, I’m just trying to help you as one seagull to another.
I got the impression from your initial post that you thought btl would be easy money . Forgive me if I’m wrong .
As someone who’s been in that game I, and others , have pointed out a few realities over the course of this thread.
Btl gives better returns than nsi bonds and low risk shares but it can be a right pain in the arse as well.
I don’t know what’s going to happen in the housing market - just advising that I’d be wary about expecting serious capital growth.it might happen, I wouldn’t bank on it though.
FWIW , I think btl is still a decent bet, not as good as before, but still profitable , especially if you think long term (ten years plus).
One last thing - have an exit strategy.
I hope this is taken in spirit intended.
Good luck with it

Renegade1 · Mar 11, 2018

Dale Jasper said:
Dude, I’m just trying to help you as one seagull to another.
I got the impression from your initial post that you thought btl would be easy money . Forgive me if I’m wrong .
As someone who’s been in that game I, and others , have pointed out a few realities over the course of this thread.
Btl gives better returns than nsi bonds and low risk shares but it can be a right pain in the arse as well.
I don’t know what’s going to happen in the housing market - just advising that I’d be wary about expecting serious capital growth.it might happen, I wouldn’t bank on it though.
FWIW , I think btl is still a decent bet, not as good as before, but still profitable , especially if you think long term (ten years plus).
One last thing - have an exit strategy.
I hope this is taken in spirit intended.
Good luck with it

I def don't think it will be easy money.I've pointed out in a previous post the negatives of it. I have some money to invest and believe me would much prefer to avoid BTL but I don't know about stocks and shares/bonds etc.

I am looking at it long term.Very long term.

Thanks for the advice

Weststander · Mar 11, 2018

Dale Jasper said:
I wouldn't buy a house at the moment expecting strong capital growth (taking inflation into account) anytime soon. Like your estate agent , I might be proved wrong . Doubt it though .

My guess for southern England, for non-very top end houses, would be for static values for 2 or 3 years as interest rates creep up, before rising again simply due to lack of supply and ever increasing demand. Central government with its law making, nimby councils and developers really need to get on with delivering 100,000's of new dwellings straight away.

Weststander · Mar 11, 2018

Renegade1 said:
Tell me how it would help young people to buy property if landlords stopped buying.

The theory goes that if private landlords sell homes by the million, values will plummet, allowing first time buyers on the ladder.

The theory.

DJ NOBO · Mar 11, 2018

Weststander said:
My guess for southern England, for non-very top end houses, would be for static values for 2 or 3 years as interest rates creep up, before rising again simply due to lack of supply and ever increasing demand. Central government with its law making, nimby councils and developers really need to get on with delivering 100,000's of new dwellings straight away.

Housing market is Notoriously hard to predict but that Sounds perfectly possible. Rapid house growth looking unlikely for a while. You only need one willing buyer to blow all the forecasts out of the window though

DJ NOBO · Mar 11, 2018

Renegade1 said:
I def don't think it will be easy money.I've pointed out in a previous post the negatives of it. I have some money to invest and believe me would much prefer to avoid BTL but I don't know about stocks and shares/bonds etc.

I am looking at it long term.Very long term.

Thanks for the advice

No worries.
Sounds like a good plan to me.
And you’re going into it with your eyes open.
I didn’t and was naive..
Keep your cool when the market dips, don’t penny pinch if you get a good tenant and maintain the place and you’ll be fine .

Birdie Boy · Mar 11, 2018

I'm thinking of btl but this is my philosophy and please tell me if I am naive.. plough whatever spare equity you have into a flat or house. Mortgage comes to £900 and I charge £1000 rent per month. I am not interested in making money every year but want someone else to pay the mortgage and when i retire sell the house that someone else has paid 50% of.
I am presuming I have missed the boat for making money every month..

Renegade1 · Mar 11, 2018

Birdie Boy said:
I'm thinking of btl but this is my philosophy and please tell me if I am naive.. plough whatever spare equity you have into a flat or house. Mortgage comes to £900 and I charge £1000 rent per month. I am not interested in making money every year but want someone else to pay the mortgage and when i retire sell the house that someone else has paid 50% of.
I am presuming I have missed the boat for making money every month..

£900 mortgage/Rent £1000.Then you pay tax on your rent so it won't cover the mortgage plus if you have any periods when you don't have a tenant or the tenant isn't paying then it's worse.

This is how I'm doing it.Taking out an interest only mortgage.It's alot less than a repayment. However I will pay what the repayment price would have been so as to gradually clear the mortgage.Doing it this way gives me the flexibility that should I have any problems as described then I can revert back to just paying the interest only amount.

If you want to make money every month you can only do so by paying just the interest only amount however the mortgage will never be paid off so it will never be yours.You will however have the difference between the original cost price and the sell price hoping the sell price is more.Personally I prefer to pay the repayment price.

Biscuit · Mar 12, 2018

Renegade1 said:
£900 mortgage/Rent £1000.Then you pay tax on your rent so it won't cover the mortgage plus if you have any periods when you don't have a tenant or the tenant isn't paying then it's worse.

This is how I'm doing it.Taking out an interest only mortgage.It's alot less than a repayment. However I will pay what the repayment price would have been so as to gradually clear the mortgage.Doing it this way gives me the flexibility that should I have any problems as described then I can revert back to just paying the interest only amount.

If you want to make money every month you can only do so by paying just the interest only amount however the mortgage will never be paid off so it will never be yours.You will however have the difference between the original cost price and the sell price hoping the sell price is more.Personally I prefer to pay the repayment price.

I can understand why you’d want a repayment mortgage on your own property but why on a BTL investment? Interest only is much cheaper, and you’re more like to break even/make a small profit every month. Of course then you’d hopefully get your deposit back plus equity when you sell?

Repayment mortgage on a BTL seems more hassle than it’s worth? Genuine question!

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Uncle Spielberg · Mar 13, 2018

Biscuit said:
I can understand why you’d want a repayment mortgage on your own property but why on a BTL investment? Interest only is much cheaper, and you’re more like to break even/make a small profit every month. Of course then you’d hopefully get your deposit back plus equity when you sell?

Repayment mortgage on a BTL seems more hassle than it’s worth? Genuine question!

Sent from my iPhone using Tapatalk

It is swings and roundabouts. The repayment mortgage will be more a month but the balance will be reducing by the same amount so you are no worse off and have more equity in the property to get better rates in the future. I would sai 90% of buy to let mortgages are interest only

LlcoolJ · Mar 13, 2018

Biscuit said:
I can understand why you’d want a repayment mortgage on your own property but why on a BTL investment? Interest only is much cheaper, and you’re more like to break even/make a small profit every month. Of course then you’d hopefully get your deposit back plus equity when you sell?

Repayment mortgage on a BTL seems more hassle than it’s worth? Genuine question!

Sent from my iPhone using Tapatalk

If you're not in it for a monthly profit but instead want a long term investment then repayment is obviously far better as you're building up equity in the property every month.

DJ NOBO · Mar 13, 2018

Biscuit said:
I can understand why you’d want a repayment mortgage on your own property but why on a BTL investment? Interest only is much cheaper, and you’re more like to break even/make a small profit every month. Of course then you’d hopefully get your deposit back plus equity when you sell?

Repayment mortgage on a BTL seems more hassle than it’s worth? Genuine question!

Sent from my iPhone using Tapatalk

I’ve gone interest only on btl and repayment on residential .
I liked the flexibility of having the monthly profits to hand.
If you keep the btl for long enough you will get capital gain, even without the mortgage having been paid off

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