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2 properties, Recent valuation £400,000 and £380,000, rental income £2600/month for both, mortgage £467,000 paying £700/month. LTV 60%. ERC 1% until October 2020.
If I remortgage both properties 75% LTV now, can take out £103,000 to £118,000 equity and fund for next one. The remortgage and purchase rate will be 1.77% + £1800 product fee. I have cash for SDLT, other cost and any top up if needed.
So, if the total value for 3 properties is £1,180,000 and mortgage is £855,000, monthly finance cost will be £1486 including product fee. Rental income tax £250/month. ERC £4670. Total rent will be around £4000.
Non-home owner, basic rate tax payer and will remain same as spouse have no earned income. Existing properties jointly owned but next one will be on spouse name to minimise S24 effect.
Can’t decide what to do? Looking for valuable advice from highly experienced PT members.
Thanks in advance.
Here's the thing.The only time any of us can buy property is NOW. Unless we own a Tardis, we cannot go into the past and buy a property, nor can we go into the future and purchase a property. So now is actually the only time.You could of course wait for a new now - but conditions, mortgage products, your health, your situation might be different. It may be better, it may be the same, it may be worse and you have to take something of a gamble on that.So my philosophy has always been to move forwards at every opportunity if conditions seem favourable. Keep you eye on your goal, buy wisely, mitigate your risk, and take that step forwards.I guess I liken it to someone who stays in while it rains. The person who has gone out in the rain reaches the view just as the sun in shining. Push through pain, uncertainty, and doubt, and you will progress steadily forwards towards your desired goal. Sustained and intelligent action on a daily basis is one confirmed path to success.
Vanessa Warwick Landlord and Co-Founder of PropertyTribes.com **If you have got value from Property Tribes, find out how you can support it in remaining a free to use community resource**
Have you factor in the drop in property prices. - what does it look like with 30%+ down. That's the question you should be asking yourself.
To me it sounds like a good idea to get on board with another property. If the new property required a renovation this would also generate more profit if you decide to sell or at least limit the affect of any decrease in house prices !
Your in a good position at present
my own view is don’t remortgage what you have to buy another property
if I was you save your deposit then buy another property
your building strength as you grow
it will take longer but Iit safer
yes buy another property if the right one is there but don’t borrow deposit to do so
Learn Change and Adapt ?????
All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.
I think I'm with Vanessa, you just have to take opportunities when they come along.
Business is a funny old thing and sometimes drilling down to too much detail will kill off any deal. There's always a reason not to do something. I wish I'd had a quid for everyone that told me they were going to buy a let house but found a reason not to do it.
Of course, we are all different, so whilst you have asked for advice, the issue will be how you feel about risk. You do need to have some concern about the risks involved and the "what if" scenario, but if your gut feel about the deal is okay and you think you can manage it then get on with it.
Running it past people will almost certainly lead to a negative reaction, especially from those that have not done it. From a professional point of view just get an adviser to double check your circumstances and review the detail.
I offer these comments as someone who has been there and done it, starting 25 years ago with a house I still own. I still buy and have a decent portfolio on the principle of just getting on with it. I use equity in houses I own to fund new purchases, although this is becoming much harder due to tighter regulations.
This Section 21 announcement will see landlords rushing for the exit I think. Some bargains to be had after the summer, so I suggest holding fire and biding your time.
Good article here related to this topic called - Emotions are dominating our investment decisionsIt concludes:We all have the capacity to let our lizard brain make investing decisions when the fight or flight instinct kicks in. A serious long-term investor needs to keep their lizard brain locked away when looking at the ups and downs of the market. Being able to spot genuine issues, trends and opportunities can only be achieved through careful consideration, knowledge and self-control.
I'm in a similar situation. That was a good analogy by Vanessa, I'm not the kind of person to be in the house waiting for the rain to go away.
Encouraging words Vanessa especially love this part..
“ I guess I liken it to someone who stays in while it rains. The person who has gone out in the rain reaches the view just as the sun in shining. Push through pain, uncertainty, and doubt, and you will progress steadily forwards towards your desired goal”
Do what is best for you Fullmoon, look at your options and go with what you feel is right. You have thought about it and really gone in detail in your thread, I have absolutely know doubt that you will make the best decision.
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