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  • Buy-to-Let

    New to BTL - is this a good deal?

    Hi everyone. New here.

    Looking to purchase a buy to let 2 bedroom apartment in a nice area.

    The estate agent said it would rent out for £1200. Property price was 250k

    Other similar properties are selling for 270k, seller wanted a quick sale, David Wilson Homes.

    Can you advice me whether you think this is a good deal in terms of the ROI. Making decisions.

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    Hi Catherine and welcome. Smile

    First of all, its very important to undertake your own due diligence as to what a flat will rent out for, rather than taking a third party's word.  Did you check with other lettings agents as to the rental value, demand, and tenant demographic in the area?

    It's also important to establish tenant demand, because if it is low, then you are going to struggle to rent the property.

    Also, what is the service charge and ground rent on the flat and how long is the lease?

    How many other flats in the block are let to investors compared to how many are actually owner/occupied?

    If you let me know the rental income of your current BTL, I can give you a rough idea of how much equity you might be able to release.

    You could either ask your current lender for what is known as a "further advance" which is very simple and you can apply direct to the lender for that, or you can look to re-mortgage, perhaps taking the opportunity to move to a better rate and/or fix the mortgage for a period to give you peace of mind. 

    A remortgage can be done via a whole of mortgage market broker like PT finance partner, Mortgages For Business, who can be contacted on propertytribes@mortgagesforbusiness.co.uk or call 0345 415 3501.

    Finally, for what it is worth, I would always recommend buying a house rather than a flat, for these reasons:

    10 reasons to buy a house rather than a flat .... EVERY time. 

    This is discussed more in this recent video:

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    Thank you Vanessa, very helpful. Total Service charge and ground rent is £139
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    As per my ready-made deal deal stacking calculations, that rent will support an approximate borrowing of £150K, meaning you can potentially release circa £39K.

    The team at Mortgages For Business (as mentioned above) would be able to source a suitable re-mortgage for you or you can ask your existing lender about a "further advance", but not all lenders offer them, and it might not be at the same rate as your existing mortgage.  I would explore both options in your shoes.

    BTW - is that £139.00 per month or £139.00 per annum?!?

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    Great news. Thanks for your advice. The £139 is per month.
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    What ROI are you looking for? surely only YOU can answer that? Some people on here look for 10+ ROI, whilst others are happy with 5%

    I just don't understand how you can think of buying a property based on what OTHER people think about your ROI?

    You have kindly told us the service charges and ground rent, but in order to get a true picture of the ROI we'll need to know what is your mortgage interest rate? How much do you expect maintenance costs would be? How many weeks a year do you expect the property to be empty? Do you self manage or do you use an agent?


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    Hi V

    Out of interest, have MFB replaced PTFS as the official partner for PT finance?

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    No, they haven't.  MFB replaced John Charcol, who things did not work out with for various reasons. 

    The two official finance partners of Property Tribes are now Property Tribes Financial Services and Mortgages for Business.  Apologies for any confusion!

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    Out of interest, are you buying via a company or in your own name ?

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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.

    If your Buying in you own name you cant be a sole trader in the eyes of HMRC Your an Investor ??

    I asked the question because your borrowing quite high sums and S24 could effect your plans ??

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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.