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  • Buy-to-Let

    Strategy Help

    Hi, I have only just found this forum but have found it very useful so far. I was wondering if people could offer me some advice on how to help me in the future.

    I currently own one BTL property, bought for 111k, complete refurb spent 10k and now worth 130-135k. It is currently let out at £675. My mortgage for this property started in May 18 and would pay £1600 early redemption fee after 1 year.

    I am in the process of completing on my second property and it follows the almost identical plan...except bought for 112k. I have another 2 year fixed mortgage deal on it and needs a complete refurb with a budget of 10k again.

    I was looking into the future and thinking how to raise a deposit for my 3rd property, would people take the hit of the early redemption fees and take out 12-14k per house which would be a substantial chunk of a deposit or just sit tight and save? Or i know its risky but potentially take a loan out from sainsbury for example to help towards it?

    All advice or information would be greatly appraciated

    Thanks

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    Hi

    You shouldn't have to pay any EPC (redemption fee)

    You can request a further advance of 75% LTV after 6 six months of ownership.

    I would suggest you pull the capital if you are going to reinvest.

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    I would slow down a bit and have a business plan which looked more than 1 year ahead

    To take a 2 yr fix out and then redeem it after a year paying an ERC is folly

    Also in my view a 2yr fix is too short .

    IR`s are on the way up so I would be going for minimum 5 yr fix

    I think the sainsbury`s loan is a no no now with new lending rules

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    Jonathan Clarke. http://www.buytoletmk.com

    Yes I know what you are saying about 2 years fixed but I did a short one to get money out sooner. I am new to this and learning as I go a long.

    i agree regarding interest rate so when I remortgage I will fix them for 5 years

    and regarding the Sainsbury’s loan could I claim it was for a car? Im not looking to go down this route but just exploring all potential avenues

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    Understand . When you get the bug you get the bug

    No no no re the car suggestion for the loan . 

    That kind of strategy  was widespread 20 years ago but stamped out now

    Bank statements are scrutinised much more these days


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    Jonathan Clarke. http://www.buytoletmk.com

    Hi Richo,

    I fear that you may struggle to release equity, even if you went the "further advance" route.

    The market conditions are currently very uncertain, and it would be prudent to keep your powder dry and just focus on building up your savings, while waiting to see how things pan out.

    Over-leveraging combined with rising interest rates and declining property values are a deadly combination and many landlords will be caught out over the coming years because they tried to scale up too quickly.

    I would get your two current properties let out and hone your tenant management skills and build your deposit to be ready to pounce when the market conditions become clearer and you can feel confident that you are not going to bite off more then you can chew.

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    Thanks Vanessa, much appreciated and very good advice.


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