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  • Property-a-holics

    New Member here. Looking for some advice

    Hi all, hope you are all doing well. (Didn't really know what Tribe to choose).

    I have only just discovered this website and its awesome, lots of useful information and all for free.

    I would like to get into Property and become a Landlord as I want to have some additional income coming in every month and also to secure my financial future through Property.

    A bit about me: I have always had an interest in Property and Property Investment. I find it extremely interesting and Im always eager to learn more. I am a 21 year old male and I live on the South East coast of England (West Sussex) . My Property knowledge is not incredible but its not bad either, I know the basics and I am constantly self-educating myself on a daily basis through books, internet, podcasts etc.

    I am currently a Home Owner with my Mother (we are both on the Mortgage), It is a 3 bed end terrace house.

    3 other people over the age of 18 are also living in the same out and contributing to the house expenses.

    Purchase Price (2017) £205,000 (25% deposit as we sold previous house for £178,000 so 75% Mortgage.     

    Revalued after 2 years (2019) £225,000

    Mortgage currently of £137,000 (was originally £127,000 but release £10,000 equity for home improvement and other costs). Mortgage is on Repayment.

    Current monthly payments £584.        Fixed interest rate for 2 years: 1.6%.

    The thing I need help on is Mortgage Lenders will not allow me to take any more money out of the Property and this is because me and my Mothers expenses are too high and it would be classed as "irresponsible lending". These expenses are 2 cars on Finance (which total £31,000) and a small loan of £2900. (There are others like Credit Cards etc. but these aren't as big).

    The only option our Mortgage/Financial advisor has given us is that we enter another 2 years fixed rate (which we have done) and reassess in 2 years time.

    So is there a way for us to release more equity money to potentially purchase another Property which I would let out?

    My main focus is to spend the money on a good investment that would earn me extra money each month and also work long-term.

    If I have missed any details out please let me know and I can tell you them as I wrote this quickly and hopefully theres enough info there to get an idea of where I am at. (Please excuse me if I sound silly anywhere as I am new to Property.

    Any ideas/suggestions would be greatly appreciated Smile

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    Hi Daniel and welcome.

    You are stuck with this LTV as it is based on affordability, and your combined incomes will not support additional borrowing.

    Therefore, as you current broker has said, you need to lower your personal debt and/or increase your income to increase affordability.

    The other option is to turn your current property into a BTL, by changing to a BTL mortgage and moving to another residential property.  Depending on the rent your current property could achieve, you could take out a higher borrowing against it, pay off your current resi mortgage, and use anything left over as a deposit on your new home.

    This is exactly how my husband and I got started 15 years ago.  I have told my story in this thread:

    Using residence as stepping stone to BTL 

    It would be well worth talking to the experienced team at Property Tribes Financial Services on 01206 654444 to make sure you are accessing the whole of market for your financial products.  They may even know of a lender who will lend more on your current resi on a residential basis, so you have nothing to lose by giving them a call.

    ​Hope that helps for starters and good luck.

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    Thanks so much for your very helpful and speedy response.

    I should have mentioned that we don't want to move out we want to buy another Property using the equity in the house.

    My Fathers friend who is a Landlord has suggested similar to what you have said.

    He said go to an Independent Broker and they might be able to find a way to take me off the Mortgage and have my Mother remaining on it on her own (if possible).

    Then I might be able to buy a Residential Property as if I was a first time buyer again and apparently I can buy a house with only a 10% deposit?

    Would this be a good approach?

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    If you have sufficient equity in your home, you may be able to bridge against it.  Again, Property Tribes Financial Services will be able to assist you on what your options are.

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    If you reduced your expenses (car finance and credit card), would this have any positive impact on your ability to borrow more?

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    Hello dmendez, thanks for your speedy response.

    This did cross my mind at one point but I wouldn't know how we could get rid of our car finances as there is still a lot to pay off.

    In terms of credit cards I don't think it would have a huge impact on being able to release equity sooner.

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    £31k is a pretty hefty car finance. I've never had car finance, so I'm not sure how it works, but could you sell the car (pay off the finance) and then with any money left over buy a small cheap car to run?

    By clearing this debt, it might enable you to then borrow against your existing property, in order to purchase another property.

    so effectively sell your depreciating asset and purchase not only an increasing asset, but also one that generates income. You can then buy a better car, and service it with the income generated from the 2nd property

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    Good idea, I will have to research more and decide what to do, I have plenty of time to decide, thanks for your response ?

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    I think you should take this opportunity of living at home to save big time, put serious money away each month and you will have a good pot to invest by this time next year. You are also lucky in that you really aren't missing out on the action because right now the market has come to a standstill. So next year you will be able to buy for just as much as you would do today. No rush. Just knuckle down and save and fine-tune your strategy by coming onto this site and looking on right move.

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    I agree save a deposit

    Its a far safer way to build a business in 2019

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    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.