increased mortgage

[connya1]

I have had tenants in my flat for the past couple of years. When I wrote to increase the monthly rent last year they said that the wife had been made redundant and they couldnt afford any increase, so rather than search for new tenants I let them stay at the same rent-even though it has meant me subsidising the cost of the flat (about £50-£100 a month) The other day my mortgage company wrote and informed me that my mortgage would increase by £300+ a month...what can I do? The AST doesnt end til Feb 2009, and I would probably have to consider selling the flat. Help!

[mind the gap]

I have had tenants in my flat for the past couple of years. When I wrote to increase the monthly rent last year they said that the wife had been made redundant and they couldnt afford any increase, so rather than search for new tenants I let them stay at the same rent-even though it has meant me subsidising the cost of the flat (about £50-£100 a month) The other day my mortgage company wrote and informed me that my mortgage would increase by £300+ a month...what can I do? The AST doesnt end til Feb 2009, and I would probably have to consider selling the flat. Help!

Your mortgage increase works out at about £70 per week, right?
Your tenants say they can't afford an extra £12.50-£25 per month.I think you have answered your own question, unfortunately.

You will need either to increase your rent to the point where it covers your mortgage (and ideally brings in a small profit, too), or you'll have to put the flat on the market and sell it - probably with tenants in situ.

It doesn't look good, but it sounds as if your business plan for this property was optimistic to say the least.

[J4L]

Planning is paramount for a business and I agree with above post that it appears that yours was not thought out correctly.
This is happening all over the country unfortunately and no one can be blamed apart from the economy.
I took a BTL mortgage out 2 years ago and 'built in' a possible increase of interest rates to 10% and worked the figures from that calculation.
It stacked up so I went ahead. I had a fixed rate at the time but STILL built in for the increase just in case the market went sour, as it has.
Not a lot you can do in this instance apart from taking the hit and hope the rates will get better or certainly shop around now to see what the best deals are that'll hit you the least or ultimately get a for sale sign up PRONTO.

[mind the gap]

You will find there are very few 'deals' to be had at all, as far as BTL mortgages go. Lots of lenders have withdrawn them completely and the ones which are left, are all at rates which make it impossible to cover the mortgage from the rental income, let alone make a profit.

I would guess the only person who will be able to own this flat is a cash buyer.

[karatepaul]

If you really are in the sh@ite consider asking your lender to let you pay interest only for a while, after all these investments are only money vehicles and should be treated as such. too many people are worried about paying off the mortgage on these vehicles and get lost in that, far more freedom and investment possibilities open up when you look at them from a different angle

[mind the gap]

If you really are in the sh@ite consider asking your lender to let you pay interest only for a while, after all these investments are only money vehicles and should be treated as such. too many people are worried about paying off the mortgage on these vehicles and get lost in that, far more freedom and investment possibilities open up when you look at them from a different angle

That would be a helpful suggestion if most BTL mortgages were not interest-only to begin with!

[karatepaul]

That would be a helpful suggestion if most BTL mortgages were not interest-only to begin with!

Dear mind of crap,

If you had bothered to read Connya1s post properly you may have noticed a lack of btl. references. I of course did notice this and spakem occrdingly, also I have only recentley took btl. on interest only I usually opt for repayment and so once again your lack of relevant expierience shines above all

[mind the gap]

Dear mind of crap,

If you had bothered to read Connya1s post properly you may have noticed a lack of btl. references. I of course did notice this and spakem occrdingly, also I have only recentley took btl. on interest only I usually opt for repayment and so once again your lack of relevant expierience shines above all

???Makes little sense, sorry.

[J4L]

hey karatekid

I think the original post by MTG was a proper and just one. Most BTL mortgages are interest only these days.

I'm sure that coming on here and being rude and offensive will not earn you the respect that you think you deserve so quit slating and have a discussion.

With 15 posts I can't see anyone on here listening to you anyway, you will have to earn their respect, not demand it.

And get a spell check for god's sake, your making my eyes bleed . . . .

[karatepaul]

He started it

[J4L]

I have NO idea what offended you in this post

"???Makes little sense, sorry."

Whether he was querying the fact that "MORE" BTL mortgages are moreoften than not dished out on an interest only basis or whether he was questioning your spelling and he infact couldn't understand the post I don't know, but could I assure you that a respectful question/answer here is better received than just following with

"Dear mind of crap,"

[agent46]

This is happening all over the country unfortunately and no one can be blamed apart from the economy.

So the housing crash, interest rate hikes, stock market turmoil and taxpayer bailouts of major banks have just happened, and are nothing whatsoever to do with the combination of irresponsible lending practices and the naked greed of BTL landlords?

Complacency and a complete absence of self-awareness doesn't even come close to describing your statement!

It looks like the chickens are finally coming home to roost. All that's missing from the situation I've been predicting for the last few years is a rise in unemployment (and as sure as eggs are eggs that will happen once we slip into recession), and the BTL party will be over....

[J4L]

FYI I was attempting to not sound too patronising in my post and that was why I took the tack that I did.

You can really be obnoxious in your posts why not get a life??

[Rodent1]

So the housing crash, interest rate hikes, stock market turmoil and taxpayer bailouts of major banks have just happened, and are nothing whatsoever to do with the combination of irresponsible lending practices and the naked greed of BTL landlords?

Complacency and a complete absence of self-awareness doesn't even come close to describing your statement!

It looks like the chickens are finally coming home to roost. All that's missing from the situation I've been predicting for the last few years is a rise in unemployment (and as sure as eggs are eggs that will happen once we slip into recession), and the BTL party will be over....

I think you will find ..Sir.........that the "BTL PARTY" is yet to begin.

As this sector will house the "problem" sector ....the financially inept, overspent, creditloaded morons who borrowed way beyond theirs means (albeit with irresponsible lender agreement).
The BTL sector is NOT the sector unable to meet payments NOR the sector which is getting repossessed .....NO ....most BTLrs are looking to expand their portfolios .........i am looking to double mine over the next few years ...

BTL will also be the sector the lenders turn to for good strong "new business" to move forwards ....

The exception will be a minority that invested in massively overpriced waterside and city center "luxury" developments ...which were clear non runners from the off, to anyone with a basic modicom of business acumen ...

BTL will in fact stop the market going into freefall and will actually SAVE the world finances ..................when the repo figs head for the moon ....who will buy these props ..."the guy with no job, 30K on credit cards, who has overspent relentlessly for years on wasteful consumerism .........am i to feel sorry for him ?"
No .........I think not .............they are no worse than the gamblers who lose their shirts on the spin of a casino wheel .......worrse in fact as they did it with NOT their money ....but borrowed money ...........this is the source of the problem .........NOT wise people who invest their time, money (and that of others), blood, sweat and tears into their properties and tenants ..........


Just how Greedy is the OP who is now in a pickle due to his LACK of greed?

A foolish move but rescueable IMHO ....!

Agent you seem very bitter and twisted over prop investment ...did you too lose your shirt thru foolish action ....and tired of kicking yourself you now find refuge in kicking out into cyberspace ?!

The Rodent (taking cover!)

[agent46]

I think you will find ..Sir.........that the "BTL PARTY" is yet to begin. etc

Your posts are very hard to read - they appear to be more like stream of consciousness ramblings. However, from what I can make out, you may be correct, because economic forecasting is rather like predicting the weather. Nonetheless, it is a fact that:

(a) The housing bubble has been pumped by BTL

(b) What you so charmingly term "irresponsible borrowing by morons" (or something similar) has come about largely because many people have been left very little option to do otherwise because firstly, they were consumed by the fear that the property market will soar beyond their reach and secondly, the income to repayment multiples are so large because house prices are so high. I don't propose to rehearse these arguments again, but, as previously set out at length on this forum in other threads, BTL is directly responsible for the enormous rise in house prices. Thus, it can be said that BTL LLs are indirectly responsible (or, less judgementally, are a significant contributory factor) in the Northern Rock debacle.

(c) BTL mortgages have a higher default rate than others and are thus "sub prime". The devaluing of derivatives and other exotic financial instruments based on sub-prime mortgages (ie: the "morons" and BTL LLs) to junk status is the source of the stagnation in the credit markets and the collapse of the banks which rely heavily on wholesale borrowing. It is notable that the two major banks to fail in the UK had business models which relied on huge exposure to the morons (Northern Rock) and BTL LLs (Bradford and Bingley).

(d) In my view, once unemployment rises (most forecasters predict big rises within the year), rent defaults will escalate, hence BTL mortgage defaults will follow suit. Given that the courts generally give very little leeway to defaulting BTL LLs, there will be an increase in distress sales of BTL properties, bringing even more stock into a market which already is in freefall. Also, then add in the fact that many BTL properties are mortgaged to the hilt and may now be in negative equity, it is not a happy outlook for the BTL sector.

Agent you seem very bitter and twisted over prop investment ...did you too lose your shirt thru foolish action ....and tired of kicking yourself you now find refuge in kicking out into cyberspace ?!

The Rodent (taking cover!)

Not at all. In fact, I've been making these points, like a voice crying in the wilderness, for years. Quite apart from the fact that BTL was clearly creating a bubble, and also, as Sir James Goldsmith said, "if you see a bandwagon, then it's too late", thankfully, I have no desire or need to sponge off others and act in an immoral and irresponsible manner which, in my view (and I am starting to read similar sentiments being expressed in the press), is highly damaging to society. I just do not like greed and selfishness, especially when it is combined with arrogant complacency, a complete absence of self-awareness and an irritating tendency to self-regardingly believe that BTL is some sort of philanthropic mission to bring reasonable quality housing to the masses.

I have a conscience, and I prefer to keep it as clear as possible.