Remortgage for an Investment property, Good idea?

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

    Remortgage for an Investment property, Good idea?

    Good afternoon,

    This is my first post so please, be gentle!!!

    I have been interested in property for many years and always dreamt of owning my own home (which i have now succeeded in doing) but my ultimate aim is to get into property development. I believe my way into this would be to start with rental properties around my local area and build up a small but manageable portfolio to learn the ropes and actually be a good landlord!

    I have been reading for months and months about ways of getting into the property development world but i do not have endless streams of cash or anything under my bed!!!

    I have recently bought my first house (second property as had flat before/ 25% shared ownership - to get me on the ladder) which cost me £215,000 with a 10% deposit. This was bought as recent as September this year! I know.. I am inpatient but i have been dreaming of this for many, many years now! I have been reading, as stated before about owning buy-to-lets and investing my money this way, rather than in the banks. I am interested in getting things moving pretty quickly and have been looking for properties in my area for around £100,000 with a 25% deposit on a buy-to-let mortgage.

    I am interested in hearing opinions and advice about re-mortgaging my home in order to fund this purchase and make the money from the rental income. If this is a viable option i believe I could afford 2 properties in my area and put down £25,000 on each leaving me a small mortgage of £75,000 on each investment. I am in the process of making my home worth more money by investing some funds into this and believe it to be worth somewhere near the £250,000 mark now leaving me with around £55,000 to play with in the property market.

    I just need a few pointers on what's the best idea for me and the best way to get to my ultimate goal of developing property in the not to distant future.

    i have a daughter on the way and want to be able to give her a better life than all my family line so far, i am the first one in my family to own my own home and I want to be able to give my daughter an easier time of it and also retire early if I can

    Thank you so much for your time, in advance and as I said before, any info/ help/ advice is greatly received!

    Thanks,

    Matt

    #2
    I'm sorry to be un-gentle here, but you have a daughter and want to give her "an easier time of it". You already have a home (on a big mortgage I guess) and now a BTL with a 90% mortgage. The "ladder" you mention can do strange things.

    You are taking a big risk by leveraging yourself further. If things go pear-shaped with the property market (which is highly likely at some point - no one knows exactly when) you will saddle your family with a debt and negative equity that might take a decade or two to recover (how ever long the pear takes).
    The time to get into property development is not now, especially if your are scraping things together through remortgages. It may have been 5 years ago. It my be in the future. But I would think carefully.

    As someone said of the stockmarket -- when taxi drivers start talking about getting in to the stockmarket it is time to get out. There are way too many taxi drivers right now who think the way to a fortune is clear. Sadly many of those are young people who have been very badly treated by a combination of manipulated interest rates, and an artificially pumped property market. Right now they need to continue holding out. My view and how I would advise my daughters.

    Do what you wish after proper research, but please think through all the possible outcomes and how you would survive them. Just avoid talk of "ladders".

    Comment


      #3
      BAD IDEA IMO
      You have a home, with 1st dau on the way. Mort interest rates are record low and likely to rise next year or economy will enter another recession & unemployment will rise again. How will you service your mortgages if left with a 'rental void or you lose your job?
      When you have sufficient savings to pay YOUR mortgage - revisit your thoughts.
      Sensible advice is never pay off credit cards by applying for another CC.

      Comment


        #4
        Madness!

        This is the road to ruin... and a nightmare as opposed to a dream. I only started letting out property when I fully owned my first house and wanted to move, not needing to sell. I would never contemplate it with a 90% mortgage still outstanding and brand new (not even 1/25th of the way there?).

        I'm not a Financial Advisor but I don't think I need to be especially qualified to dismiss your dream as a day dream (at this time).

        Pay down your own mortgage... that always puts a smile on the face.

        Comment


          #5
          Thank you all very much for your guidance and advice! Exactly what I am after! I wanted people who had been there and done it and appreciate everything you have said! It certainly has put me off for now but I will continue on my quest to better my family! Thanks so much again, I am and will continue to be happy to pay my mortgage off for now. hopefully I'll post again in a few years in a much better position asking fpr some more guidance

          Matt

          Comment


            #6
            I can guarantee you will be happy paying down your mortgage and I think that also betters your family. Good luck.

            Or, get an offset mortgage when you can... wonderful things.

            Comment


              #7
              If you want to do it - get your house paid off first. Overpay your mortgage as much as possible (those fine folks over at the MSE forum may be able to help you in ways you hadn't even thought of). Then get a "war chest" built up (a year's salary?) - then look to build a deposit for a BTL and go from there, safe in the knowledge that your daughter will always have a home, and that if you get a tenant from hell, you can still pay the mortgage while you go through the eviction procedures.

              Comment


                #8
                I agree with what has been said.
                It is too risk to do with a family.
                I would first build up an ICE (in case of emergencies) fund - say about 6 months income in an ISA.
                Then pay down the mortgage. I had paid off 90% of mine before I got a second property.

                Comment

                Latest Activity

                Collapse

                Working...
                X