Argh. Accidental landlord losing nerve: should I hold or sell?

  • Filter
  • Time
  • Show
Clear All
new posts

  • Argh. Accidental landlord losing nerve: should I hold or sell?

    We bought a house after downsizing our residential property, and my partner's mother, who was ill at the time and needed to move, lived there until she died. We couldn't sell at that point and the market was rising still so it seemed wise to hold onto it.

    Then things crashed, and our various fixed residential rates ended. We were moved onto an extra per cent rate by our rental mortgage company, who stopped offering BTL mortgages at that point. They would not offer us any further discounts/remortgages. We are now paying 5.99%, property could probably sell at 140k, mortgage 95k. Part repayment, part IO.

    We let it out taking in approx 500 pm after agent's fees, which means we make a small loss every month, given insurances etc.. House is about 10 years old with low maintenance changes on a desirable family estate with a good primary school and we have a good long term tenant and a decent agent.

    On our residential mortgage we are now almost in negative equity - bought for 250k with repayment mortgage of 220k just 4 years ago and house now worth 225k: not sure what dent we've made into the balance but it is not much. Our mortgage rate on this is not very favourable either.

    We earn a decent joint salary of about 100k.

    The main problem is we're overextended (isn't everyone), with also about 20k of credit card debt. I just don't think, in the current climate, anyone is going to offer us a remortgage on either property with these figures. Or am I mistaken.

    We are stuck about whether to try hard to change the mortgages, whether to cut our losses and sell (we might just break even on the rental property overall, but I'm not sure how to work out how much, if any capital gains tax we'd be liable for - we have never made a profit - in fact considerable losses in the years we paid the mortgage with no rent - in any year we've had it and it has risen 23k above the original purchase price of 117k)

    ...or whether to do as we originally planned which was to hold onto it for 15-20 years whatever happened to the housing market, in the hope it would gradually creep up in value...

    Sorry to ask what is probably a really dim set of things to a professional landlord, but as you can tell, I'm not one...

  • #2
    You are almost answering your own question. Sounds like you were not cut out to be a LL.

    Lloyds are offering and cheaper BTL mortgage right now but if you want out you should sell and clear that massive CC debt. Am I the only person in the world who pays theirs off every month?

    Freedom at the point of zero............


    • #3
      Oddly enough I find dawn still breaks every day even with only a debit card...


      • #4
        Have you got your figures right?

        The situaton doesn't look that bad. Reads more like you need to sit down and do some proper financial accounting and planning. You've got £45k equity in one property (about 32%) and £5k in another.

        You don't say whether the mortgage values are those outstanding or just the value taken out.

        I don't see how you're going to make a loss on the £140k property if you sell. Any capital gains will only be on the profit made so if there's £10k profit then that's what you pay tax on.

        £20k on credit cards although a large sum is certainly manageable. Be a card tart and off load it onto a lower rate card. Moneysavingexpert . com has lots of clear and helpful information. The important thing is to not keep spending on them (see below).

        Given your combined income you should easily be able to 'afford' this situation. Sounds like you just need some basic home economics.
        There is always scope for misinterpretation.

        If my posts can be interpreted in two ways, one that makes you feel angry and one that doesn't, I meant the latter.

        Everyday is an opportunity to learn something new.


        • #5
          The simplest way to cut debt is to cut up your credit card and sell one of your properties.


          • #6
            You could always sell the lot, get a ticket to vegas and put it all on red or black. Ive heard worse ideas....


            • #7
              You've got a really good joint income. Rein in the spending for a year or two -- go without the latest phone, tv etc... get the credit cards paid off and hang onto the properties for the long term.

              Our joint income is about £40k but we are holding onto a property where the rent is only just covering the mortgage (after fees but before tax and maintenance). We have a third property which brings in about £280 pcm after agency fees. Overall they just about cover each other really. If/when interest rates start rising then I may need to pay off the agencies and management them myself.


              Latest Activity


              • not sure how to work out my most successful property
                Or even my least!
                I'd like to sell a property, but not one of my better performers, but not sure what sums to do. How do fellow landlords calculate their favourite?
                I'm sure it's something to do with equity, mortgage payments and rental income, but in what order?
                26-07-2017, 08:18 AM
              • Reply to not sure how to work out my most successful property
                I would look at the current profit you make on each property, compared to how much equity you have in that property. I suppose you could call that Return on Capital Employed.
                Then I'd do a SWOT on each one. What are the Strengths, Weaknesses Opportunities and Threats.
                I'm actually doing...
                26-07-2017, 20:45 PM
              • remortgage for new purchase: rates
                I have a BTL with no mortgage. Just thinking of re-mortgaging the BTL, add some money from pocket and buy a new BTL. Banks are happy to lend at lower rates below 2%, but not when I tell them that I might buy the new BTL in a LTD Co. Then they want to charge more interest, as they consider it as business...
                25-07-2017, 17:59 PM
              • Reply to remortgage for new purchase: rates
                thank you, gentlemen.....
                26-07-2017, 20:21 PM
              • Reply to remortgage for new purchase: rates
                Then, you can say you are looking out to buy another BTL ( but not mention buying under a company name ) ,
                26-07-2017, 18:09 PM
              • Reply to remortgage for new purchase: rates
                Stating that you intend to buy another BtL property is acceptable for the vast majority of lenders , if however you stated it was to pay a tax demand then the majority of lenders would give a categoric No.
                I have just raised a £750000 commercial loan in order that one party of the partnership...
                26-07-2017, 16:36 PM
              • Reply to remortgage for new purchase: rates
                That is where the problem is.. they ask why you want the funds, and then I feel compelled to disclose the plan. If I just say 'another BTL' and shut up, the fear is that they might (will they?) later ask for proof of new purchase and would see the LtdCo as the owner.. Will that lead to complication...
                26-07-2017, 16:18 PM
              • Reply to remortgage for new purchase: rates
                OK, thank you for clarifying that. You said 'slightly cheaper'.. why so, why not the same rates as personal BTL?
                FYI, I had discussed with a/c and received the go ahead.
                26-07-2017, 16:08 PM
              • Reply to remortgage for new purchase: rates
                Ah, you can re-mortgage the BTL held under your name at best rate and not say how you plan to spend the money..

                After you have the money from mortgage lender , you can proceed to buy a BTL under company name without mortgage.....
                26-07-2017, 16:08 PM
              • Reply to remortgage for new purchase: rates
                Fine you are going to capital raise , lend the monies plus other available funds to the Limited Co as a Directors loan , the Company in turn will own an unencumbered property. No issues, as long as your personal credentials meet the lenders minimum income requirements and the rental is strong enough...
                26-07-2017, 15:04 PM