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I've been scratching my puzzled little head after seeing this advert from Bradford and Bingley for BTL mortgages,

and the website www.meandmydreams.co.uk (the theme is stuff like "dream of someone else paying your mortgage").

Anyway, lots of sensible advice on the website, things like doing your sums before you become a landlord. The

thing is, I just cannot see how the sums can possibly add up.

In my area, a typical 2 bed apartment would cost say £185000 (often more). Properties of the same type would rent

for about £650pcm (I guess there are lots of places in the UK that would have similar proportions). Assuming I have

£30k lying around not doing very much to use as deposit, this would be an IO mortgage repayment of just over £900

at 6.8%

I haven't done precise calcs but of course things like legal fees, surveys, stamp duty, EA fees, voids, IR rises, insurance,

service charges, repairs, loss of interest on deposit etc etc all need to be taken into account. Also B&B's minimum rental

requirement is 125% of the mortgage repayment - at least £1125!!!

Does anybody have any ideas about how BTL could possibily be a good idea for a new "investor" in the current climate?

Maybe it's something to do with the line "No need to provide proof of income" on the website.

I just tried to call B&B posing as an interested landlord-to-be to talk through my figures and see what they say, but they

were closed. If I get chance, I'll do it tomorrow. Will be interesting.

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I've been scratching my puzzled little head after seeing this advert from Bradford and Bingley for BTL mortgages,

and the website www.meandmydreams.co.uk (the theme is stuff like "dream of someone else paying your mortgage").

Anyway, lots of sensible advice on the website, things like doing your sums before you become a landlord. The

thing is, I just cannot see how the sums can possibly add up.

In my area, a typical 2 bed apartment would cost say £185000 (often more). Properties of the same type would rent

for about £650pcm (I guess there are lots of places in the UK that would have similar proportions). Assuming I have

£30k lying around not doing very much to use as deposit, this would be an IO mortgage repayment of just over £900

at 6.8%

I haven't done precise calcs but of course things like legal fees, surveys, stamp duty, EA fees, voids, IR rises, insurance,

service charges, repairs, loss of interest on deposit etc etc all need to be taken into account. Also B&B's minimum rental

requirement is 125% of the mortgage repayment - at least £1125!!!

Does anybody have any ideas about how BTL could possibily be a good idea for a new "investor" in the current climate?

Maybe it's something to do with the line "No need to provide proof of income" on the website.

I just tried to call B&B posing as an interested landlord-to-be to talk through my figures and see what they say, but they

were closed. If I get chance, I'll do it tomorrow. Will be interesting.

Have they recently upped their rent requirment from 100% to 125%?

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Have they recently upped their rent requirment from 100% to 125%?
Here's hoping! At 125% of mortgage repayments, I wouldnt mind specualting that they wont be doing much 'new' buisness!

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I've been scratching my puzzled little head after seeing this advert from Bradford and Bingley for BTL mortgages,

and the website www.meandmydreams.co.uk (the theme is stuff like "dream of someone else paying your mortgage").

Anyway, lots of sensible advice on the website, things like doing your sums before you become a landlord. The

thing is, I just cannot see how the sums can possibly add up.

In my area, a typical 2 bed apartment would cost say £185000 (often more). Properties of the same type would rent

for about £650pcm (I guess there are lots of places in the UK that would have similar proportions). Assuming I have

£30k lying around not doing very much to use as deposit, this would be an IO mortgage repayment of just over £900

at 6.8%

I haven't done precise calcs but of course things like legal fees, surveys, stamp duty, EA fees, voids, IR rises, insurance,

service charges, repairs, loss of interest on deposit etc etc all need to be taken into account. Also B&B's minimum rental

requirement is 125% of the mortgage repayment - at least £1125!!!

Does anybody have any ideas about how BTL could possibily be a good idea for a new "investor" in the current climate?

Maybe it's something to do with the line "No need to provide proof of income" on the website.

I just tried to call B&B posing as an interested landlord-to-be to talk through my figures and see what they say, but they

were closed. If I get chance, I'll do it tomorrow. Will be interesting.

the small non-diversified mortgage companies are going to get a serious cummapance; their faith in property is bewildering.

as a further example, here's a list from moneysupermarket.com of most superficially competitive self-cert and sub-prime mortgage providers:

SELF CERT:

Standard Life Bank

5.34% 2 Years 7.31% 7.4% APR 75% No overhang

Ipswich BS

5.74% Oct 2009 7.49% 7.4% APR 75% No overhang

Cheshire BS

5.79% 3 Years 7.79% 7.7% APR 80% No overhang

Cheshire BS

5.94% 5 Years 7.79% 7.5% APR 80% No overhang

Leeds BS

6.05% Term 7.75% 6.5% APR 80% No overhang

ADVERSE CREDIT:

Yorkshire BS

5.14% 2 Years 7.65% 7.6% APR 95% No overhang

Beverley BS

5.44% 2 Years 6.94% 6.9% APR 75% No overhang

BM Solutions

5.49% 3 Years 8.34% 8% APR 75% No overhang

Norwich & Peterborough BS

6.49% 10 Years 7.74% 7.2% APR 90% No overhang

Derbyshire BS

6.5% Aug 2010 7.75% 7.9% APR 80% No overhang

Standard Life is the only organisation of any commercial significance in that lot. The rest of them, like B&B, are simply likely to be hoovered up in part of the great credit market rationalisation that will also result from the ongoing correction. It's interesting to note that the biggies - the HSBCs and Barclays of this world are staying out of this side of the business, as they are diversified enough to have other areas to make money.

I used to work for one of these (smallish mortgage companies) up until quite recently, the internal view of the company was VERY bulish about property - this coming from the company's head economist, and also the mortgage lending risk manager who didn't understand basic economic terms or sound like had any A levels so far as I understood.

Edited by Si1

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...and the website www.meandmydreams.co.uk (the theme is stuff like "dream of someone else paying your mortgage").

Hahaha! I have misread it as www.mendmydreams.co.uk :D

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I've been scratching my puzzled little head after seeing this advert from Bradford and Bingley for BTL mortgages,

and the website www.meandmydreams.co.uk (the theme is stuff like "dream of someone else paying your mortgage").

Anyway, lots of sensible advice on the website, things like doing your sums before you become a landlord. The

thing is, I just cannot see how the sums can possibly add up.

In my area, a typical 2 bed apartment would cost say £185000 (often more). Properties of the same type would rent

for about £650pcm (I guess there are lots of places in the UK that would have similar proportions). Assuming I have

£30k lying around not doing very much to use as deposit, this would be an IO mortgage repayment of just over £900

at 6.8%

I haven't done precise calcs but of course things like legal fees, surveys, stamp duty, EA fees, voids, IR rises, insurance,

service charges, repairs, loss of interest on deposit etc etc all need to be taken into account. Also B&B's minimum rental

requirement is 125% of the mortgage repayment - at least £1125!!!

Does anybody have any ideas about how BTL could possibily be a good idea for a new "investor" in the current climate?

Maybe it's something to do with the line "No need to provide proof of income" on the website.

I just tried to call B&B posing as an interested landlord-to-be to talk through my figures and see what they say, but they

were closed. If I get chance, I'll do it tomorrow. Will be interesting.

Only if one had oodles of cash to put down (as a deposit) and one had seriously considered whether one might need that money within 20 years. But that really begs the question, if you have that much cash to put down for 20 years, would one need a mortgage and would it get better returns being in a bank account paying at least 6% AER ?

For the new investor in my view it's not a good time to start being a landlord. Current landlords well able to ride a storm will do just that. Keep their heads down and their tenants happy.

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# Our rental requirement is 125% of your monthly mortgage interest payment and if you fix your payments for 5 years or more, it’s only 120%

http://www.bradford-bingley.co.uk/tv/html/...canyouoffer.htm

It does seem impossible to recover the 7.9%APR they charge over the term by renting a property, only reason for it would be recovering tax you would have paid and including that in your own figures to cover any shortfall.

Edited by maxwell

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I just found out that housing associations manage property for banks. Around 50% of their stocks are property owned by banks. Banks rent the property to them and they add a percent on the rent.

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Does anybody have any ideas about how BTL could possibily be a good idea for a new "investor" in the current climate?

Maybe it's something to do with the line "No need to provide proof of income" on the website.

BTL doesn't stand up to any level of scrutiny and hasn't since 2004. The numbers you quote in your example bear this out.

£650 rent = £7800 per annum for £185,000 investment equates to a 4.2% gross yield (before tax) Compare this to the 6%+ yield you can get in a savings account and only a fool would think BTL a good idea. I haven't included rental voids, tenant problems, agency fees, stamp duty, insurance et al

which make the comparisons more riduculous.

Of course I haven't allowed for capital growth of the house to compensate for the lack of yield..... Well the 4.2% yield is the lead indicator that should be screaming at you that the asset is already way over priced. If it wasn't overpriced the yield would be closer to 10% than 5% .... END OF

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Oh my good lord!!

I love this bit, look under "is there an experts guide"

We've had one specially written by Fiona Fullofsh1t* - who as well as being an actress , just happens to have become a very successful property investor

:lol::lol::lol:

At least they are offering "expert" market advice then!!!

*name changed to protect identity ;)

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