Mortgage paying off/affording extension question

[kebabking]

Most of this discussion has gone right over my head because finances give me a headache.

I do feel a bit sad about the BTL discussion though. It’s all equities this, offsets that, blah blah blah but this is people’s homes we’re talking about.

I just don’t think we should be encouraging people becoming landlords to boost their income without thinking about all the other pressures and responsibilities that comes with it. Can you be a good landlord and do you give enough of a shit about other people to do it well?

I’m probably being hopelessly sentimental but I’m good with that tbh.

I found that the best way to look at it - selfishly, obvs - is to separate the two different markets within BTL: market one is 'family' homes that if price was £8.60, people would buy to live in on a long term basis, and market two is student and young workers who, even if price was entirely affordable, simply wouldn't want to buy because they might only be somewhere for a year/3 years, before moving on.

That's about location, and type of property, and it's easy to distinguish between the two.

Doing BTL in market two isn't depriving anyone of the security of a long-term/family home, simply because those people aren't looking there, and the people who are looking there want something they can walk away from with a month's notice. Doing BTL in market one however...

 

[moonsi til]

I let out a flat that was once my home & consider myself as someone who cares. I didn’t set out to own a second property it came about due to my flat not selling so I then worked many extra hours to get a deposit for a small house which enabled me to move & keep the flat via a let to buy mortgage on the house.

I also wanted my previous home to be my tenants home so if they want to hang pictures & paint etc they can. I also put the rent lower than market value as I thought market value price was too much & as I let it out without an agent I’m able to this more easily. I’m now 11 years into renting it out over 4 tenancies. The first stopped paying rent & did a moonlight flit , the second were a couple who fell out many times & the police called often & eventually split up & left the area, the third was there for a few years & moved from another flat in the building as mine was cheaper then left as needed ground floor & the fourth has been there a few years. I also take DSS & consider myself as responsive to any needs raised. We have an agreement if he needs to replace anything that is my responsibility such as recently a handle for the window he takes the cost of the rent.

The flat is leasehold which is a licence to print money in my opinion. I pay more per month in charges for the flat than I do for building & contents for my house & last 3 invoices (they are twice per year) they have requested between £250-£400 in addition for ‘reserve funds’ -but that’s for another thread.

So I found myself in the situation of renting out my previous home which I have decided to carry on doing as part of retirement plan & I hope along the way people feel it is their home & are not feeling ripped off.

 

[kabbes]

Most of this discussion has gone right over my head because finances give me a headache.

I do feel a bit sad about the BTL discussion though. It’s all equities this, offsets that, blah blah blah but this is people’s homes we’re talking about.

I just don’t think we should be encouraging people becoming landlords to boost their income without thinking about all the other pressures and responsibilities that comes with it. Can you be a good landlord and do you give enough of a shit about other people to do it well?

I’m probably being hopelessly sentimental but I’m good with that tbh.

I think the thing is that if you feel this way, you aren’t going to BTL anyway. So the message about it not being the best off investments is for those who don’t actually care about the social implications

 

[Looby]

I think the thing is that if you feel this way, you aren’t going to BTL anyway. So the message about it not being the best off investments is for those who don’t actually care about the social implications

Which is my point. The people that probably will be good landlords are not the ones with huge BTL portfolios who are prioritising profit and returns.

That’s why it being suggested as a money making scheme makes me uncomfortable. I don’t really care if it’s a bad investment beyond that probably being worse for the people living in those homes.

Obviously there’s people like moonsi above who kind of fall into it and clearly that’s different but that’s not really what I was getting at.

Anyway it’s a derail and I wasn’t going to post but I guess I was sitting and waiting for someone else to and they didn’t.

 

[AnnO'Neemus]

Most of this discussion has gone right over my head because finances give me a headache.

I do feel a bit sad about the BTL discussion though. It’s all equities this, offsets that, blah blah blah but this is people’s homes we’re talking about.

I just don’t think we should be encouraging people becoming landlords to boost their income without thinking about all the other pressures and responsibilities that comes with it. Can you be a good landlord and do you give enough of a shit about other people to do it well?

I’m probably being hopelessly sentimental but I’m good with that tbh.

I wasn't encouraging people to become landlords. In fact I explicitly made the same point as you, about landlords needing to do their research and be aware of not only their own legal and financial obligations and responsibilities, but also they need to be aware of and understand tenant's rights. Because many BTL landlords don't know those things.

 

[Cloo]

My view on BTL is that it was totally stupid to make the country so reliant on small LLs. Most LLs own only 1 or 2 places and sooner or later they will have to sell up, generally not to buy themselves a Lamborghini, but because they've retired, or divorced or want to give their kids a deposit etc. Which makes it no better for the tenants who have to move and I think a lot of LLs underestimate how hard it can be for them to find somewhere. I blame the system rather than most of the LLs, although a lot of them really don't have a clue what they're doing as it's not like you need to pass a test in order to do it, or even sign up to a mailing list that might keep you up to date on your responsibilities, which seems nuts to me. Also I think the system can encourage some nasty bastards at the bottom of the market who know they can buy the most run down barely habitable shitheap, split it up into multiple rooms, do nothing to maintain it and still have an endless stream of people wanting to rent it because they simply can't afford anywhere else.

I ended up letting my first house for longer than I lived there myself, as gsv didn't want to live in the area (I resented this for years, but in restrospect I think it was better for our relationship not to start off in a house just one of us owned); I did not enjoy being an LL as I really did not want to be a crap one so I felt guilty as hell any time anything had to be done worrying whether I'd got it seen to soon/well enough. The upside was that it gave me a personal income while I was on mat leave and while the kids were at nursery - during that time I literally paid my work salary in its entirely to our bills account.

I think a lot of bad LL reps come from agents as well - some people hand over the agents who don't pass on tenant problems and don't deal with them, which was one reason I managed it myself.

 

[AnnO'Neemus]

I let out a flat that was once my home & consider myself as someone who cares. I didn’t set out to own a second property it came about due to my flat not selling so I then worked many extra hours to get a deposit for a small house which enabled me to move & keep the flat via a let to buy mortgage on the house.

I also wanted my previous home to be my tenants home so if they want to hang pictures & paint etc they can. I also put the rent lower than market value as I thought market value price was too much & as I let it out without an agent I’m able to this more easily. I’m now 11 years into renting it out over 4 tenancies. The first stopped paying rent & did a moonlight flit , the second were a couple who fell out many times & the police called often & eventually split up & left the area, the third was there for a few years & moved from another flat in the building as mine was cheaper then left as needed ground floor & the fourth has been there a few years. I also take DSS & consider myself as responsive to any needs raised. We have an agreement if he needs to replace anything that is my responsibility such as recently a handle for the window he takes the cost of the rent.

The flat is leasehold which is a licence to print money in my opinion. I pay more per month in charges for the flat than I do for building & contents for my house & last 3 invoices (they are twice per year) they have requested between £250-£400 in addition for ‘reserve funds’ -but that’s for another thread.

So I found myself in the situation of renting out my previous home which I have decided to carry on doing as part of retirement plan & I hope along the way people feel it is their home & are not feeling ripped off.

Similar-ish scenario to me, in that I consider my flat to not only be my home but also to be a long term investment, it's effectively my pension too.

I haven't had any AST tenants yet, but have occasionally had lodgers, sometimes while I've been living there and sometimes while I've mostly been working or studying elsewhere but I haven't moved out, my lucky lodgers just didn't see that much of me.

I've also taken in waifs and strays and let quite a lot of people stay for free, sometimes for a few days or weeks, sometimes for months. Because I do care about people who are stuck and need somewhere to live. I've probably 'lost' thousands of pounds over the years, in terms of letting people stay for free when I could've charged rent and earned money.

I will probably rent out the whole flat at some point.

 

[purenarcotic]

Think kabbes has made a great point about generic advice being difficult. My (largely uneducated) thoughts are:

• not having to pay a mortgage seems like a no brainer to me. You could put the money you currently pay towards it towards works on the house, money for the kids when they become adults, general savings… it frees up a great portion of your income to do all sorts things. Appreciate the issue with a fee, so would need to explore that more with the financial advisor
• if the roof needs doing and you can afford both conversion and mortgage pay off then great. Or do mortgage pay off and use current mortgage payments to save towards it
• if for some reason it isn’t currently worth it to pay off the mortgage, then it may be worth exploring with the advisor what else you could do with the money. If nothing else is the money in the best ISAs etc
• I’d section off some of it for the kids. As you’ve pointed out, they might have to live with you long into adulthood, so if you can set things up now to help them out, do so. If you can’t pay off all the mortgage without doing this then pay off what you can, but it seems nuts to me not to have something for them if you have funds to do so
• don’t leave yourself in a position where you have no savings left. You never know what’s around the corner or what could happen

 

[kebabking]

I think I would prioritise sorting out the material condition of the house as the first thing - roof, windows etc.. saving up to fix a serious problem is a great way to ensure it becomes more serious, and more expensive. Do it now, it's not going to get cheaper, or less serious. If you find that you need to sell, work like that needing to be be done could halve the number of people who are interested, and so hugely effect the selling price.

Then mortgage. Cull most of it, but remember that once you get into your fifties, even if you've a high income, getting a mortgage from scratch can be difficult. Much easier to remortgage. You may need to help children, you may need to move...

Stash some for the kids: the world is your oyster, but think about it in terms of the phases of their life - driving lessons, car, deposit and few months rent for first flat...

 

[Tones]

There are no 'good' landlords. All of them are my class enemies.

 

[B.I.G]

I let out a flat that was once my home & consider myself as someone who cares. I didn’t set out to own a second property it came about due to my flat not selling so I then worked many extra hours to get a deposit for a small house which enabled me to move & keep the flat via a let to buy mortgage on the house.

I also wanted my previous home to be my tenants home so if they want to hang pictures & paint etc they can. I also put the rent lower than market value as I thought market value price was too much & as I let it out without an agent I’m able to this more easily. I’m now 11 years into renting it out over 4 tenancies. The first stopped paying rent & did a moonlight flit , the second were a couple who fell out many times & the police called often & eventually split up & left the area, the third was there for a few years & moved from another flat in the building as mine was cheaper then left as needed ground floor & the fourth has been there a few years. I also take DSS & consider myself as responsive to any needs raised. We have an agreement if he needs to replace anything that is my responsibility such as recently a handle for the window he takes the cost of the rent.

The flat is leasehold which is a licence to print money in my opinion. I pay more per month in charges for the flat than I do for building & contents for my house & last 3 invoices (they are twice per year) they have requested between £250-£400 in addition for ‘reserve funds’ -but that’s for another thread.

So I found myself in the situation of renting out my previous home which I have decided to carry on doing as part of retirement plan & I hope along the way people feel it is their home & are not feeling ripped off.

All the people that liked this tale of the “good” landlord…the “unfortunate” landlord… the “saint landlord” who was “forced” to rent out one of their two properties need to take a look at themselves.

Amazing how you managed to work “many extra hours” to buy a second property, unlike those that couldn’t be bothered so stayed renting.

And have a buy to let mortgage on the house they live in?

I also enjoyed the stories of the rogue tenants, that you just wanted to give a home to at lower than market rent.

Utterly contemptible.

 

[moonsi til]

i worked a fuckton of extra shifts & in addition stuck to a very strict budget. I did those long hours so yea I’m happy with you calling my efforts amazing.

 

[B.I.G]

i worked a fuckton of extra shifts & in addition stuck to a very strict budget. I did those long hours so yea I’m happy with you calling my efforts amazing.

Landlords

How comes your flat wouldn’t sell?

 

[existentialist]

All the people that liked this tale of the “good” landlord…the “unfortunate” landlord… the “saint landlord” who was “forced” to rent out one of their two properties need to take a look at themselves.

Amazing how you managed to work “many extra hours” to buy a second property, unlike those that couldn’t be bothered so stayed renting.

And have a buy to let mortgage on the house they live in?

I also enjoyed the stories of the rogue tenants, that you just wanted to give a home to at lower than market rent.

Utterly contemptible.

I've a feeling you've let yourself automatically assume that ANYONE who ends up as a landlord must by definition be a baby Rachmann.

Simplistic, naive, and not a little unreasonable.

 

[B.I.G]

I've a feeling you've let yourself automatically assume that ANYONE who ends up as a landlord must by definition be a baby Rachmann.

Simplistic, naive, and not a little unreasonable.

Did you actually read the post?

The flat wouldn’t sell so they were forced into making money out of denying someone a home of their own.

 

[Looby]

FFS, I didn’t raise this for it to become a thread bashing or attacking other posters. Sorry it’s become that but it really wasn’t my intention.

 

[moonsi til]

B.I.G I’m ok with your rage. I posted my information freely & you are entitled to your response.

 

[Cloo]

• don’t leave yourself in a position where you have no savings left. You never know what’s around the corner or what could happen

This is on my mind as I'm less than a year into a new job with the economy going to shit, so anything could happen in the next 9 months or so and I wouldn't be due any(?) or much redundancy if shit did go down.

Also my other half is potentially launching a business this year albeit one he could potentially work on a contract while getting it running

At least I have now made a career move that opens up about 300% more roles than my previous job, so I feel much less nervous about the prospect of losing a job in future.

 

[Puddy_Tat]

and I wouldn't be due any(?) or much redundancy if shit did go down.

statutory redundancy pay doesn't kick in until you've got 2 years' service in, and then it's a week (or a week and half)'s pay per year of service. some employers will offer more.

you can take out income protection insurance (some mortgage lenders will lean on you to take this out but it's not compulsory) although they are fairly good at including get-out clauses

 

[Cloo]

Yeah, had a feeling it was 2 years. I should maybe look up IPI and consider if it's worth its for at least a bit. I have no reason to believe my role's under threat imminently but I reckon if I make it through the next 18 months I'm OK. Not having childcare costs and commitments anymore and also, as I said, having a wider field I can now work in, contract roles are now feasible for me and would be my likeliest bet of finding something more quickly.

 

[kebabking]

We had an amusing experience with HSBC when we were buying this place - they said they'd only give us a particular interest rate (ridiculously low, think it was a carryover from our last place) if we took their life insurance because of my job - upon checking the small print, my job was specifically excluded from their life insurance...

Oh, how we laughed.

 

[Puddy_Tat]

We had an amusing experience with HSBC when we were buying this place - they said they'd only give us a particular interest rate (ridiculously low, think it was a carryover from our last place) if we took their life insurance because of my job - upon checking the small print, my job was specifically excluded from their life insurance...

Oh, how we laughed.

 

[WouldBe]

Did you actually read the post?

The flat wouldn’t sell so they were forced into making money out of denying someone a home of their own.

But they didn't deny someone a home they provided one. It would have been a different matter if they had left the property empty.

If a house won't sell what is the owner supposed to do?
Sell it for less than the outstanding mortgage and then have no home, not able to afford to buy elsewhere and still have a mortgage to pay?

 

[B.I.G]

But they didn't deny someone a home they provided one. It would have been a different matter if they had left the property empty.

If a house won't sell what is the owner supposed to do?
Sell it for less than the outstanding mortgage and then have no home, not able to afford to buy elsewhere and still have a mortgage to pay?

Well why didn’t it sell?

I suspect they won’t tell us as it will make them look bad.

 

[Tones]

All landlords are cunts. No matter the lies they tell themselves.

 

[WouldBe]

Well why didn’t it sell?

I suspect they won’t tell us as it will make them look bad.

Main reason houses don't sell is that they can't get the asking price.

 

[B.I.G]

Main reason houses don't sell is that they can't get the asking price.

Think what you want. Lots of flats can’t be sold since Grenfell because the banks won’t lend to buy them because they aren’t safe. So the owners put tenants in them and bought somewhere safer for themselves.

 

[WouldBe]

Think what you want. Lots of flats can’t be sold since Grenfell because the banks won’t lend to buy them because they aren’t safe. So the owners put tenants in them and bought somewhere safer for themselves.

Very few flats in this country are clad in dangerous cladding and it wouldn't stop a cash buyer buying it.

 

[B.I.G]

Very few flats in this country are clad in dangerous cladding and it wouldn't stop a cash buyer buying it.

So your theory is that with house prices rising, somehow they couldn’t sell their flat at a reasonable price, so as they said they were forced to work extra shifts to buy a house, and somehow despite further price rises it still hasn’t reached a price at which they can sell it.

They can reveal all.

 

[WouldBe]

So your theory is that with house prices rising, somehow they couldn’t sell their flat at a reasonable price, so as they said they were forced to work extra shifts to buy a house, and somehow despite further price rises it still hasn’t reached a price at which they can sell it.

They can reveal all.

House prices haven't always risen. There have been times when houses have been in negative equity. They haven't said when this happened. You seem to be making a lot of assumptions.