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NatterJackToad

Should I Buy A 2Nd Property & Rent Out My Current?

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Guys,

Some advice needed, and this forum deals in the real world so hopefully will get some good guidance.

My situation (NW UK):

Bought 1st terraced property as a FTB for £120 in Jan-10.

Think I can get £140 for it (current mortgage lender valued it at £140, EA valued £150).

Current mortgage of £80k remaining.

Which leaves me with £60 in equity.

Will it be advisable to pull that out, sink it into another property at £220, and rent out my current?

I should be able to get £550 or £600 for my current place per month.

IRs obviously need taking into consideration…

Edited by NatterJackToad

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Dear flagrant chancer, I expect you'll need to leave 25% equity on the first property so that you can let it out. Meaning you can only 'take out' £25,000. BTW you're not taking out anything expect extra debt. Go speak to your mortgage lender, see what you actually need and then do the maths.

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Dear flagrant chancer, I expect you'll need to leave 25% equity on the first property so that you can let it out. Meaning you can only 'take out' £25,000. BTW you're not taking out anything expect extra debt. Go speak to your mortgage lender, see what you actually need and then do the maths.

Most BTL's never seem to bother with the maths. Once you factor in HPI everything adds up to ££££! :P

She/he probably won't tell the bank that the first property is going to be rented out. So to the OP I say, go to your broker, who will advise you of the necessary lies to use to get another mortgage on top of the one you already have. Lets say you are able to lie enough to get one of those HTB new builds, then you will only need a 5% deposit. Once you have your little property portfolio you will be sitting pretty and able to point and laugh at all us remaining sad renters on this site! Point out that it is dead money, etc. My sister is doing the same thing so it has to be ok! :P

Edited by renting til I die

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Most BTL's never seem to bother with the maths. Once you factor in HPI everything adds up to ££££! :P

She/he probably won't tell the bank that the first property is going to be rented out. So to the OP I say, go to your broker, who will advise you of the necessary lies to use to get another mortgage on top of the one you already have. Lets say you are able to lie enough to get one of those HTB new builds, then you will only need a 5% deposit. Once you have your little property portfolio you will be sitting pretty and able to point and laugh at all us remaining sad renters on this site! Point out that it is dead money, etc. My sister is doing the same thing so it has to be ok! :P

Watching someone attempt this legitimately, it's not as easy as he hoped and that's with 25% down on both places.

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Watching someone attempt this legitimately, it's not as easy as he hoped and that's with 25% down on both places.

That's why finding a creative (with the truth) broker is so important!

I wish NatterJackToad all the luck in the world, with his £60 in equity and his outstanding £80k mortgage. :P

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Loving the hatred, guys.

I’m as pro-HPC as the rest of you guys.

Can’t stand EA’s, cant stand bankers… can’t stand how screwed then younger generations have been.

But, we all have to live and try and do our best in this cesspit of a situation we have inherited.

If I’d have listened to you guys in 2010 I would have rented for the last 5 years.

Instead, I’ve paid off £40k in mortgage repayments, and my property has “gone up” by £20-£30k.

Quite a few of my friends have hung onto there’s whilst moving up the ladder, but I know they are taking big risks in doing so.

Thought I’d ask fellow HPC’ers for advice, but my god, its true in some cases what they say about you lot…

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You have to do the maths, and in particular the cost of running a BTL. If you run high LTV's on both properties then I think you have to be warned against the idea, when IR's go up, then the rented property will be a millstone, even if you don't get a dodgy tenant.

Also consider where your life is, married or going to? Kids or not? are you moving to somewhere that will be a home or a stop gap to somewhere else? Do you actually need to move at all?

If not then carry on paying down your debt, look at other investments other than property, surprisingly there can be better and easier ways to get some cash.

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Loving the hatred, guys.

Im as pro-HPC as the rest of you guys.

Cant stand EAs, cant stand bankers cant stand how screwed then younger generations have been.

But, we all have to live and try and do our best in this cesspit of a situation we have inherited.

If Id have listened to you guys in 2010 I would have rented for the last 5 years.

Instead, Ive paid off £40k in mortgage repayments, and my property has gone up by £20-£30k.

Quite a few of my friends have hung onto theres whilst moving up the ladder, but I know they are taking big risks in doing so.

Thought Id ask fellow HPCers for advice, but my god, its true in some cases what they say about you lot

Someone fraped natterjack.

No one could post that with a straight face.

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You have to do the maths, and in particular the cost of running a BTL. If you run high LTV's on both properties then I think you have to be warned against the idea, when IR's go up, then the rented property will be a millstone, even if you don't get a dodgy tenant.

Also consider where your life is, married or going to? Kids or not? are you moving to somewhere that will be a home or a stop gap to somewhere else? Do you actually need to move at all?

If not then carry on paying down your debt, look at other investments other than property, surprisingly there can be better and easier ways to get some cash.

Good post.

I still find it shocking how many people are 'moving up the ladder' and keeping their old place to rent. I met a few at open days when I was looking for somewhere to live, a while back, and know several couples that are all planning to do the same thing when they move. It seems to be the 'in' thing.

As a grumpy old HPC'er crossed with an angry man from Neasden attitude, I really hope these people, friends or not, crash and burn when rates go back up to some sort of normal level! :ph34r:

Edited by renting til I die

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Good post.

I still find it shocking how many people are 'moving up the ladder' and keeping their old place to rent. I met a few at open days when I was looking for somewhere to live, a while back, and know several couples that are all planning to do the same thing when they move. It seems to be the 'in' thing.

As a grumpy old HPC'er crossed with an angry man from Neasden attitude, I really hope these people, friends or not, crash and burn when rates go back up to some sort of normal level! :ph34r:

Well we are looking at moving at the moment, and loads of estate agents have suggested this as the 'thing to do' - maybe just because they make more money on the lettings - and while the initial numbers they spout look attractive, it only takes about 15 mins of proper number crunching to show that with today's numbers it is not very attactive.

Although I have to admit I did do this in the past, around 2003, and it worked well (exceeding well for my ex-wife, no so much for me...), but then the debt was reasonable and the numbers worked. All changed now though.

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Well we are looking at moving at the moment, and loads of estate agents have suggested this as the 'thing to do' - maybe just because they make more money on the lettings -

This is exactly why so many are doing it. Prospective sellers go along to their friendly estate agent and are told things are not what they used to be but a good way of moving up is to rent their present abode and then buy. Its made to sound very attractive and also at the same time appeals to the sellers ego...(become a landlord and start a portfolio...join the elite) what can possibly go wrong.

It`s good business for the EA`s and breaks what really is otherwise, a log jam. They get ongoing commission/fees by managing the rental property and also fees for selling a property on their books to their new customer (mug).

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It's all very theoretical, will you achieve your £140k for a terrace in Preston(?)

I just can't see how 'moving up' with less equity is a good thing, you pay a higher mortgage rate, which in the future will be magnified when mortgage rates increase/LTV's tighten... How is a scraping of profit after management fees, costs etc. going to even cover the increased cost of a higher LTV on the new house.???? People doing this can't be possibly doing the maths, or are head in the sand lapping up everything the EA and his greasy backroom mortgage broker have got to say.

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