Housey question

[Gad-Westy]

My girlfriend and I currently own a flat each, both two bedrooms. Hers is rented out at the moment for the next 6 months and we both live in mine.

Just having a few lazy friday thoughts about taking advantage of the current low house prices and renting out my flat as well and buying a proper home for us both. Maybe when the markets have recoverred a little we could cash in on the flats or just keep them rented and let them pay themselves.

Its rather hypothetical at the moment but just thought I'd guage more learned folks opinions on the risks of this. The biggest risk I could see is that both flats could become empty and that isn't a situation we could afford. I'm not sure how much deposit is needed at the moment either in order to purchase a new place or whether we would even be considerred for a new mortgage because we'd already have mortgages on the flats.

Anyway, daft idea or worth consideration?

[illmonkey]

Unlikly to get an other mortgage if your current one isnt a buy to let. Unless you're earning big bucks.

So, you'd need to remortgage both flats, requiring a BTL mortgage, say around 30% deposit on both. You then can proceed to get a good mortgage for the 3rd place.

I don't see the point, personally. Stay put for a bit, save and then when its on the up start looking to buy, pending the other flats getting sold.

Edited by illmonkey on Friday 20th February 12:10

[Gad-Westy]

illmonkey said:

Unlikly to get an other mortgage if your current one isnt a buy to let. Unless you're earning big bucks.

So, you'd need to remortgage both flats, requiring a BTL mortgage, say around 30% deposit on both. You then can proceed to get a good mortgage for the 3rd place.

I don't see the point, personally. Stay put for a bit, save and then when its on the up start looking to buy, pending the other flats getting sold.

Edited by illmonkey on Friday 20th February 12:10

Cheers, the deposits would likely be the stumbling blocks as I doubt there is enough LTV in either them at present.

I hate it when people give me sensible advice

[Gargamel]

Decent idea - you need to work on the details and then speak to a mortgage broker and get an idea of what you can afford.

Biggest risk is that you and your partner split up, how will you unwind the new house investment - it pays to think carefully about this. unromantic though it may be

what is the equity in both flats.
what are the mortgages ?

What deposit could you leave in both flats ? 20% each ?

If so how much could you put on a new deposit, at 2.5 joint salary what type of house can you get ?

Interest rates are low, in two years they could be 4% or 5% what will you income cover then.

Could you survive three months with no rental income, also you need about three months rent in hand for repairs or breakages and possibly to redecorate about every 18months between tenants

Also factor in insurance cost and tax on the rental income

[scotal]

illmonkey said:

Unlikly to get an other mortgage if your current one isnt a buy to let. Unless you're earning big bucks.

That depends on who your current lender is and their attitude to permission to let.

illmonkey said:

So, you'd need to remortgage both flats, requiring a BTL mortgage, say around 30% deposit on both. You then can proceed to get a good mortgage for the 3rd place.

Btl would need at least 25% , depends on rental income.

[MrV]

Should also point out at the moment you could get away from not having to pay Capital gains tax if you sell either of the flats ,taking it they are both on a resi mortgage .If you go for a third property you will be liable for it in the future.

[Gad-Westy]

Gargamel said:

Decent idea - you need to work on the details and then speak to a mortgage broker and get an idea of what you can afford.

Biggest risk is that you and your partner split up, how will you unwind the new house investment - it pays to think carefully about this. unromantic though it may be

what is the equity in both flats.
what are the mortgages ?

What deposit could you leave in both flats ? 20% each ?

If so how much could you put on a new deposit, at 2.5 joint salary what type of house can you get ?

Interest rates are low, in two years they could be 4% or 5% what will you income cover then.

Could you survive three months with no rental income, also you need about three months rent in hand for repairs or breakages and possibly to redecorate about every 18months between tenants

Also factor in insurance cost and tax on the rental income

You've given me a lot to think about. I haven't even run this past the other half so the whole idea may be a total non-runner. Just looking at some figures and everything looks marginal at best which would make it a risky proposition and right now that's the last thing I want. Sensible side of me is saying to sit tight but I just keep seeing for sale outside nice affordable houses!

[The Moose]

Gargamel said:

stuff...

I bet after all this your begining to wish you never had the thought in the first place!! lol

Seriously though, I know a couple who have just done this bf/gf, both with flats in London. Now they are both rented out and they have just bought a really nice house in Ken, so it is doable.

Cheers

The Moose

[scotal]

Gargamel said:

at 2.5 joint salary what type of house can you get ?

Interest rates are low, in two years they could be 4% or 5% what will you income cover then.

Could you survive three months with no rental income, also you need about three months rent in hand for repairs or breakages and possibly to redecorate about every 18months between tenants

Also factor in insurance cost and tax on the rental income

Why 2.5 x joint?

Rental income can be offset against mortgage interest on BTL.

If its a flat, the insurance costs shouldn't change, it'll be block insurance (check your lease allows letting)
Good advice on void periods.

[Gargamel]

re 2.5 joint salary - Its the low risk end of mortgage multiples . just because someone might lend you 4 times joint salary doesn't make it a good idea ... imho

[Gad-Westy]

Cheers gents. I may still look into this but its not looking very possible or sensible. Advice much appreciated.

[scotal]

Gad-Westy said:

Cheers gents. I may still look into this but its not looking very possible or sensible. Advice much appreciated.

If you want an idea of mortgages available drop me a line.

[paoloh]

Gad-Westy said:

illmonkey said:

Unlikly to get an other mortgage if your current one isnt a buy to let. Unless you're earning big bucks.

So, you'd need to remortgage both flats, requiring a BTL mortgage, say around 30% deposit on both. You then can proceed to get a good mortgage for the 3rd place.

I don't see the point, personally. Stay put for a bit, save and then when its on the up start looking to buy, pending the other flats getting sold.

Edited by illmonkey on Friday 20th February 12:10

I hate it when people give me sensible advice

Doesn't happen around here often, so you're safe

[munky]

Personally I wouldn't buy more property in a falling market.. wait a bit and it will be cheaper

We've sort of done the opposite - the OH and I sold our flats and rented a house - we'll buy again when the time is right (there were other reasons for us renting mind)

[illmonkey]

munky said:

Personally I wouldn't buy more property in a falling market.. wait a bit and it will be cheaper

We've sort of done the opposite - the OH and I sold our flats and rented a house - we'll buy again when the time is right (there were other reasons for us renting mind)

House prices are generally going up at the minute. Now(ish) is probably a good time to buy. Besides, it sounds like it'd be a longer term house.