My Housing Predicament
Discussion
I'll try and keep this short. Basically I stupidly bought a flat at the end of 2007 and even more stupidly on a 95% 40 year mortgage. I was 23 at the time so have now realized the error of my ways.
I lived away for a little while but I'm now back in it. Mortgage balance is circa £87k, next door is up for sale at £90k. I have savings (enough for a 10% deposit on a new house). Mortgage affordability is indicated at £200k plus. In a nutshell I hate the place and want to buy a new place and feel at my age now I should be in a proper house rather than a s**t flat where I hate the neighbors.
The positives are that rents are going for upwards of £550 a month now in the block which IMO is a fairly healthy return.
I'm looking for some inspiration. What would you do in my position? With the flat next door being on the market at such a low amount I'm really put off by the idea of selling right now. Any thoughts?
I lived away for a little while but I'm now back in it. Mortgage balance is circa £87k, next door is up for sale at £90k. I have savings (enough for a 10% deposit on a new house). Mortgage affordability is indicated at £200k plus. In a nutshell I hate the place and want to buy a new place and feel at my age now I should be in a proper house rather than a s**t flat where I hate the neighbors.
The positives are that rents are going for upwards of £550 a month now in the block which IMO is a fairly healthy return.
I'm looking for some inspiration. What would you do in my position? With the flat next door being on the market at such a low amount I'm really put off by the idea of selling right now. Any thoughts?
Most mortgage companies will allow you to rent out without converting to a buy to let mortgage.
Take advantage of that and rent it out whilst you buy or rent another place for you to live. See if you enjoy, well, at least tolerate being a landlord and if the sums stack before committing to and incurring the costs of a mortgage change.
I don't think you have a great deal to lose by doing this, and potential a nice little pension supplement in the future.
Take advantage of that and rent it out whilst you buy or rent another place for you to live. See if you enjoy, well, at least tolerate being a landlord and if the sums stack before committing to and incurring the costs of a mortgage change.
I don't think you have a great deal to lose by doing this, and potential a nice little pension supplement in the future.
How is it a good idea for someone with little to no equity/assets to get into the buy to let game?
I would suggest first off NOT becoming an amateur landlord and trying to rent your own place out; especially if you have little to no equity in your current place. You will effectively have two houses owned by the bank instead of one and two to lose if things to tits up. Plus you will have all of the expense of running two houses (albeit rent may cover this on one of them).
A 'consent to let' is usually valid only for 1 year I believe - after that if you wanted to continue you would have to convert to a proper BTL mortgage which require a 25% deposit.
Save until you can afford a sizeable deposit on the a new place and/or pay down your mortgage with a lump sum to reduce your LTV and stay put for a while? Are you on a fixed deal? If you are and your deal is ending soon a lump sum payment will bring your LTV down and you will get better rates which can in turn allow you to save more for the next place in say a couple of years.
I would suggest first off NOT becoming an amateur landlord and trying to rent your own place out; especially if you have little to no equity in your current place. You will effectively have two houses owned by the bank instead of one and two to lose if things to tits up. Plus you will have all of the expense of running two houses (albeit rent may cover this on one of them).
A 'consent to let' is usually valid only for 1 year I believe - after that if you wanted to continue you would have to convert to a proper BTL mortgage which require a 25% deposit.
Save until you can afford a sizeable deposit on the a new place and/or pay down your mortgage with a lump sum to reduce your LTV and stay put for a while? Are you on a fixed deal? If you are and your deal is ending soon a lump sum payment will bring your LTV down and you will get better rates which can in turn allow you to save more for the next place in say a couple of years.
Edited by vescaegg on Friday 5th September 09:37
vescaegg said:
I would suggest first off (if it has crossed your mind) NOT becoming a landlord and trying to rent your own place out; especially if you have little to no equity in your current place. You will effectively have two houses owned by the bank instead of one and two to lose if things to tits up.
Save until you can afford a sizeable deposit on the second place and/or pay down your mortgage with a lump sum to reduce your LTV and stay put for a while?
Sensible advice.Save until you can afford a sizeable deposit on the second place and/or pay down your mortgage with a lump sum to reduce your LTV and stay put for a while?
It's all well and good renting out the current place but if you mortgage yourself to the hilt for a new place, could you afford the mortgage and associated costs of the flat if it was empty for say six months?
vescaegg said:
How is it a good idea for someone with little to no equity/assets to get into the buy to let game?
I would suggest first off NOT becoming an amateur landlord and trying to rent your own place out; especially if you have little to no equity in your current place. You will effectively have two houses owned by the bank instead of one and two to lose if things to tits up. Plus you will have all of the expense of running two houses (albeit rent may cover this on one of them).
A 'consent to let' is usually valid only for 1 year I believe - after that if you wanted to continue you would have to convert to a proper BTL mortgage which require a 25% deposit.
Save until you can afford a sizeable deposit on the a new place and/or pay down your mortgage with a lump sum to reduce your LTV and stay put for a while? Are you on a fixed deal? If you are and your deal is ending soon a lump sum payment will bring your LTV down and you will get better rates which can in turn allow you to save more for the next place in say a couple of years.
I suggested taking advantage of the period where the bank will let you rent your place out without any funding penalties. I also suggested either buying or renting, that's up to the OP and his personal financial position.I would suggest first off NOT becoming an amateur landlord and trying to rent your own place out; especially if you have little to no equity in your current place. You will effectively have two houses owned by the bank instead of one and two to lose if things to tits up. Plus you will have all of the expense of running two houses (albeit rent may cover this on one of them).
A 'consent to let' is usually valid only for 1 year I believe - after that if you wanted to continue you would have to convert to a proper BTL mortgage which require a 25% deposit.
Save until you can afford a sizeable deposit on the a new place and/or pay down your mortgage with a lump sum to reduce your LTV and stay put for a while? Are you on a fixed deal? If you are and your deal is ending soon a lump sum payment will bring your LTV down and you will get better rates which can in turn allow you to save more for the next place in say a couple of years.
Edited by vescaegg on Friday 5th September 09:37
Life is short, if you are unhappy living there and don't want to sell at the price someone will pay and have an interim option to cover costs plus some then why not? Better idea than living there miserable or selling at a loss and realising negative equity.
gibbon said:
vescaegg said:
How is it a good idea for someone with little to no equity/assets to get into the buy to let game?
I would suggest first off NOT becoming an amateur landlord and trying to rent your own place out; especially if you have little to no equity in your current place. You will effectively have two houses owned by the bank instead of one and two to lose if things to tits up. Plus you will have all of the expense of running two houses (albeit rent may cover this on one of them).
A 'consent to let' is usually valid only for 1 year I believe - after that if you wanted to continue you would have to convert to a proper BTL mortgage which require a 25% deposit.
Save until you can afford a sizeable deposit on the a new place and/or pay down your mortgage with a lump sum to reduce your LTV and stay put for a while? Are you on a fixed deal? If you are and your deal is ending soon a lump sum payment will bring your LTV down and you will get better rates which can in turn allow you to save more for the next place in say a couple of years.
I suggested taking advantage of the period where the bank will let you rent your place out without any funding penalties. I also suggested either buying or renting, that's up to the OP and his personal financial position.I would suggest first off NOT becoming an amateur landlord and trying to rent your own place out; especially if you have little to no equity in your current place. You will effectively have two houses owned by the bank instead of one and two to lose if things to tits up. Plus you will have all of the expense of running two houses (albeit rent may cover this on one of them).
A 'consent to let' is usually valid only for 1 year I believe - after that if you wanted to continue you would have to convert to a proper BTL mortgage which require a 25% deposit.
Save until you can afford a sizeable deposit on the a new place and/or pay down your mortgage with a lump sum to reduce your LTV and stay put for a while? Are you on a fixed deal? If you are and your deal is ending soon a lump sum payment will bring your LTV down and you will get better rates which can in turn allow you to save more for the next place in say a couple of years.
Edited by vescaegg on Friday 5th September 09:37
Life is short, if you are unhappy living there and don't want to sell at the price someone will pay and have an interim option to cover costs plus some then why not? Better idea than living there miserable or selling at a loss and realising negative equity.
'you're only young OP and have a long time ahead of you to do all that you want. Dont riskily (not a word) get in debt up to your eyeballs at this stage in your life. If things go tits up it could send you off course in life for a LONG time. Try to put up with what you have for a little longer and do it when you can afford to because doing it now means borrowing your way out of it'.
gibbon said:
Most mortgage companies will allow you to rent out without converting to a buy to let mortgage.
e.
This used to be the case but a mate of mine recently wanted to do this and they insisted on a BTL mortgage of course at a higher % oh and a lower LTV the op would need to put in the best part of £20k to do that which I imagine would scupper his chances of buying somewhere else. e.
Op you could sell loose £5k? Learn from your mistake and move on. If the price drops further you could end up in negative equity!
Definitely food for thought here. Thankyou
I guess the sensible solution is to stay put for a little longer and increase my overpayments whilst still still putting money away.
Flats in my area are generally selling very well and a quick rightmove search shows that most are either sold or under offer. The same flat next door sold for £83k only in November so I guess he's hoping for a bit if a return. I can probably put up with another 12 months or so at a push. Hopefully in 12 months I can just get shut, cover the mortgage and start a fresh elsewhere. Maybe put this one down as a bad experience and learn from it.
Realistically I couldn't afford 2 sets of payment if things did go wrong or if the tenants moved out. Especially now I'm consulting and not salaried.
I guess the sensible solution is to stay put for a little longer and increase my overpayments whilst still still putting money away.
Flats in my area are generally selling very well and a quick rightmove search shows that most are either sold or under offer. The same flat next door sold for £83k only in November so I guess he's hoping for a bit if a return. I can probably put up with another 12 months or so at a push. Hopefully in 12 months I can just get shut, cover the mortgage and start a fresh elsewhere. Maybe put this one down as a bad experience and learn from it.
Realistically I couldn't afford 2 sets of payment if things did go wrong or if the tenants moved out. Especially now I'm consulting and not salaried.
To clear a few things up...
I was in a similar situation as the OP, bought a house before the crash and ended up in negative equity, so I now rent it out. (I bought another place to live in when I had to move due to work)
Firstly, the majority of mortgage lenders will give you a 3yr consent to lease on your original mortgage before you have to change terms.
When the 3 years are up you will have to move to a buy to let mortgage, but it is highly unlikely you will be asked to stump up 25% deposit, you will just move across to a new rate on your current equity level (if any at all!)
Finally, you really don't want to be a landlord, it's a total ballache, so avoid if at all possible
I was in a similar situation as the OP, bought a house before the crash and ended up in negative equity, so I now rent it out. (I bought another place to live in when I had to move due to work)
Firstly, the majority of mortgage lenders will give you a 3yr consent to lease on your original mortgage before you have to change terms.
When the 3 years are up you will have to move to a buy to let mortgage, but it is highly unlikely you will be asked to stump up 25% deposit, you will just move across to a new rate on your current equity level (if any at all!)
Finally, you really don't want to be a landlord, it's a total ballache, so avoid if at all possible
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