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Just like many other landlords I am at a quandary as to whether I should use my warchest to invest or pay down debt...especially after S24...
When I look at the current prices in SE, 300k for 2 bed, the figures dont't really stack on 75 LTV especially when all costs are taken into account, is the 75 LTV model still feasible in SE or is the 60 LTV the minimum I should aspire to for a new purchase?
Why is 75% LTV not viable?
I'm using the same LTV and get over £500 cash flow per month in London.
Everyone has different investing criteria so without knowing your circumstances its hard to give you any advice. What are your aspirations? I assume if you're affected.by S24 then you're buying in your personal name?
How much cash flow would you like to make?
Hi ncooper, do you mind sharing some of your details in the area or property type you quoted your figures from?
Our analyst mapped out the whole of London zone 1 to 6 and struggle to obtain cashflow of £500 / month with 75% LTV, unless you are referring to properties in the million mark.
My 3 most recent purchases:
1. 2 bed/2 bath flat in E3 for £325k. 75% LTV on 5yr IO mortgage @3.65%. After mortgage payments, service charges, ground rent and £500 a year allocated for maintenance im getting £675 cashflow
2. 1 bed flat in E14 for £260k. Same mortgage as above. £503 cashflow
3. 1 bed flat in E14 for £272k. Same mortgage as above. £527 cashflow
Buying another at the moment. 2 bed/1 bath in E3 for £357k. Will definitely clear £500 a month but until I've purchased and rented it can't give you actual figures other than mortgage will be 3.49%
Hi ncooper1974 thanks for your reply
I have been looking at a 2 bed in Bexley borough for 285 but by the time I have put down a deposit of 75k and paid the SD i have invested over 90k on a 2 bed which will generate 1-1100 in rent. If I go for the lower figure I will get just under 900 (after letting fees) and then deduct 440 for a 5 year fixed mortgage excluding insurance and other costs for net return of about 350-400
I am achieving a return of 600 plus on my others but these were bought over 10 years ago for a a much lower price and deposit, do I need to put down a bigger deposit or go for the 2 year fixed mortgages which are cheaper but have arrangement fees of 2k...
Many thanks in advance
The problem is that you're buying the wrong property!!! On a £285k property I'd be expecting at least £1250pcm.
The 2x 1 beds that I highlighted above are being rented for £1250 pcm and £1295pcm respectively.
2 beds I'm looking at £1500pcm minimum, but I don't know your area so can't comment too much.
You can certainly get a 2 year fixed to obtain a cheaper rate but I think its a false economy as you're going to incure fees in 2 years time when you need to remortgage.
Higher deposit will reduce your ROI but once again it all depends on what you're trying to achieve. I'm looking purely at cashflow and so I wanted to make my money work hard for me
Just one query if I may
What SD are you paying on a purchase price of 325k
Same as every other investor. £16k I think. Why?
Just wanted to confirm the cost for my budget that's all
Thanks for your advice, wish you the best of luck
Big loan arrangement fees only really work for larger loans - where the fee is thereby diluted.
Maybe also look at 5yr fixes to avoid yet more fees on expiry.