How to fund my first property ?

Collapse
X
  • Filter
  • Time
  • Show
Clear All
new posts

  • How to fund my first property ?

    On the surface of things i have two options. I am looking at buying my first investment property, i will probably be a 2 bed flat or a 2 bed terrace, costs for the flat about 60k and the house about 70k... i live up north

    I have about £20k deposit in the bank, both my wife and i work full time and i own my own home outright which is a 3 bed semi.

    So, would it be more sensible to just get a BTL mortgage and pop the £20k down as a deposit and away i go, or remortgage my home for either £40/£50k add in my deposit and buy which ever property outright ?

    To add a bit of background ... my wife is not keen at all to endanger our home now its mortgage free, but finacially which would be the best best ? Ta.

  • #2
    Just use your 20K - keep some back for voids or unpaid rent.

    If all goes good and you enjoy being a landlord - I'd remortgage your own house and borrow another 20K and get another property. Only if your wife has come round to the idea though.

    Comment


    • #3
      No No, you dont want to do that. Deffinately remortgage your own home. 1. You can buy for cash and get either a reposession or auction property (much cheaper) 2. It will be cheaper 3. If you decide its not for you the chances are you will of bought the property cheap enough to move on and not make a huge loss 4. if you like it and want to buy more you then get a BTL, chances are if you buy right you will recieve a much better valuation than what you paid giving you more money to move forward.

      Comment


      • #4
        Both opinions have their merits and i can see logic in them both, what Claymore says had been in my mind, to just go down the usual route and if it works out fine then just get £20k out of the house and get another.

        Comment


        • #5
          Hmm. But I'm guessing that if you remortgage your own house, and then buy the BTL for cash you won't be able to claim mortgage interest relief? Or am I wrong?

          Comment


          • #6
            The loan would be wholly and exclusively for the purpose of buying property for the rental business. As such, and as I understand it, interests and fees would be deductible.

            http://www.hmrc.gov.uk/manuals/pimmanual/PIM2105.htm

            Based on that, hech123's suggestion makes a lot of sense, imo.

            Comment


            • #7
              Originally posted by Hudson01 View Post
              Both opinions have their merits and i can see logic in them both, what Claymore says had been in my mind, to just go down the usual route and if it works out fine then just get £20k out of the house and get another.
              Yes, both opinions do have merit and tbh, I myself did exactly as Hech suggested when I started out - but I was absolutely sure about what I was doing. The reason I suggested you use your deposit was so that you get a taste for the BTL and give your wife a chance to get used to it before going bigger.

              I bought my first property and second at auction with cash and basically added value and remortgage later on. It is the way to go I think :-).

              Comment


              • #8
                I think the term i am thinking of is '' steady '', its my first toe dipping and although i only intend to have two properties, i still want to take it easy. I intend to get both on repayment and want them paid in 15 years. Thanks for the help and this forum has been a very good education prior to getting into being a landlord, i hope to not make the usual mistakes i see a lot making.

                Comment


                • #9
                  Originally posted by Hudson01 View Post
                  I think the term i am thinking of is '' steady '', its my first toe dipping and although i only intend to have two properties, i still want to take it easy. I intend to get both on repayment and want them paid in 15 years. Thanks for the help and this forum has been a very good education prior to getting into being a landlord, i hope to not make the usual mistakes i see a lot making.
                  Don't get them on repayment!

                  You should get interest only and then put the amount equalling the 'repayment' into a savings account - an ISA if it is not fully utilised. Pay the loan off at the end.

                  The more you reduce the mortgage over the period, the more you will pay the tax man.

                  Comment


                  • #10
                    Originally posted by Claymore View Post
                    You should get interest only and then put the amount equalling the 'repayment' into a savings account - an ISA if it is not fully utilised. Pay the loan off at the end.
                    If the ISA rate is higher than the mortgage rate this may make sense. However I doubt this can commonly be the case these days.

                    Originally posted by Claymore View Post
                    The more you reduce the mortgage over the period, the more you will pay the tax man.
                    I'm not sure it makes much a difference as the amount that would be used to repay the capital is considered income either way.
                    Ie. however mortgage is repaid does not impact tax liability, (I would think).

                    What makes a difference for sure is the difference of the amount of interests paid as they are deductible.
                    In any case, best is to pay as little interests as possible.

                    Comment

                    Latest Activity

                    Collapse

                    • Portfolio Selling
                      BlueMystery
                      I hope this is the right forum to post on - apologies if not.

                      A friend has approached me who owns appx 20 properties throughout England and Scotland - they were originally owned by her husband now deceased and she doesn't want to retain them.

                      She understands that Capital Gains...
                      15-08-2017, 16:05 PM
                    • Reply to Portfolio Selling
                      halcyon
                      I would also be interested in hearing about companies or investor landlords seeking to buy portfolios as I am considering selling my portfolio in Yorkshire.
                      16-08-2017, 00:26 AM
                    • Consent to Let from Santander
                      mefaisalus
                      I would like to ask a question regarding buy to let consent application with Santander. I have got a residential mortgage with Santander for the last two months with a 5 year fixed deal but due to unforeseen circumstances I have to relocate to a different city because of my job. I have the intention...
                      14-08-2017, 22:39 PM
                    • Reply to Consent to Let from Santander
                      Foxosaur
                      We have a Santander mortgage and the 2 year fixed term ran out in June this year, we applied for consent to let(similar reasoning to you) in November 2016 and it was fine, I think we paid around £195 for the privilege though. So we had the house for around 15 months before asking.

                      I think...
                      15-08-2017, 21:57 PM
                    • Reply to Consent to Let from Santander
                      mefaisalus
                      Hey Mr wright76 was it with Santander r with any other bank I would like to know what someone should do in this situation just wait for 6 months and applied for consent to let again has anybody tried with Santander or has anybody got consent to let sooner then 6 months please do share your experien...
                      15-08-2017, 21:51 PM
                    • Reply to Consent to Let from Santander
                      Wright76
                      I have a friend with a residential mortgage that let's out.

                      She asked to be moved to a BTL or for permission to let and as the company do not offer BTL mortgages they refused.

                      She asked what she was meant to do and the answer was nothing!. The company have the right to call...
                      15-08-2017, 18:32 PM
                    • Reply to Portfolio Selling
                      BlueMystery
                      I wondered that about the acquisition dates - aside from the marital home she was not registered on the deeds until after he died,
                      15-08-2017, 17:42 PM
                    • Reply to Portfolio Selling
                      JK0
                      I may be wrong, but I don't think there will be any CGT payable. There is no death duties from husband to wife, and as far as I know, the inheritance sets the acquisition value at the date of death.

                      Am I on to something?
                      15-08-2017, 17:24 PM
                    • Reply to Consent to Let from Santander
                      HantsAgent
                      Those types of banks still exist, they're just not on the high street. I use one and all the decisions are made in branch by my personal manager under the supervision of the branch Director.

                      As for the OP, Santander will see this as you deliberately trying to get a BTL mortgage without...
                      15-08-2017, 09:33 AM
                    • Reply to Consent to Let from Santander
                      jpkeates
                      I couldn't agree more.

                      I'd expect that a bit of persistence with the (inevitable) call centre would get them to the right bit of the script eventually.
                      The increased rate (or equivalent compensation) should be carrot enough - if you can find someone who can see that....
                      15-08-2017, 08:53 AM
                    Working...
                    X