To want to buy a second property

[TheArts]

I'm 51.
After several mc I had my dc late in life in my early 40s.
DH is 55.
DH and I are low earners, teachers, joint annual income £70,000 but that's before the deductions for tax, NI.
This is a terrible mistake of us both, but neither of us paid in to pensions until 5 years ago. Terrible I know. But we always struggled with our income versus high mortgage (high due to SE housing costs) and saw payment pensions as money we could use to help with the mortgage, pay bills, car costs, etc. and other life expenses. I can't actually tell you how much I regret this now. But money has always been tight and I can't change it now.
We will not receive any inheritance. DH's parents and my parents are in rented social housing with no savings between them. So there is no financial change to our circumstances on the horizon.
Both DC have SEND and because of their specific needs I feel they are going to be dependent on us in to their adulthood.
We live in a tiny house, front door leads straight in to lounge, no hallway, kitchen is 7ft x 9ft, 3rd bedroom for DC2 is 6ft x 8ft. So there's no opportunity to sell and downsize in order to inject some capital in to our lives when we retire (DC will still be living at home due to our late age as parents and their SEN).
Since having DC I've reduced my hours to part time, which has meant reduced monthly income plus - not only did I only start paying in to my pension 5 years ago - it's on a part time wage which means my pension contribution is even smaller still, due to reduced hours.
I can't work full time because DC would not be able to manage wraparound before/after school care, they literally wouldn't cope, they can barely cope with being at school 6.5 hours a day, and both only do so with lots of school scaffolding in place to support them through the day.
We have £50,000 left on our mortgage.
I am desperate to, in some way, improve our future financial situation.
AIBU to think we could buy a second property, a flat maybe, I have heard you can get a mortgage late in life now, as a buy to let? I wouldn't be looking for a monthly income profit, I would simply be looking at the rent covering the mortgage each month. But after 25 years, I'd be 75, the mortgage would be paid off having always been paid by tenants, and at that point we could continue to rent it out and then the rent would top up our monthly income at a point in our lives when we will be on an extremely low pension with adult DC who may likely still be living at home.
Or am I completely and utterly mad for even thinking this could be viable?
It's just that DH and I have always struggled financially throughout our adulthood despite working really bloody hard in our chosen professions, neither of us have ever had any financial help from parents, neither of us will ever receive anything financially from parents, DC are not looking set to be good earners in adult life therefore our support towards them will need to continue well in to our retirement, we are both looking at working for years past the standard retirement age of 65 despite feeling utterly bleak about the thought of it because we won't actually be able to afford to retire, and all I can see on the horizon is financial struggles.
I feel like a bloody idiot right now, lots of life regrets, and a failure as a parent in terms of knowing I'm never going to be able to financially provide for my DC when they become young adults, which is causing me great distress, so please be gentle.

Can you claim anything as you can't work full time due to childcare?

Having had a rental property it is not something I would recommend. People don't pay rent, leave the place like a shit tip, grow dope, don't leave when they've given notice .... bloody nightmare. BtL mortgages cost more and you'll have to paty capital gains tax on anything you make if you sell. You would place yourselves in a very precarious position.

If you have spare money, put it into your pension. What's hubby's pension like?

DH pension is terrible too because he only started paying in to it at the age of 50.

Your state retirement age is 67 rather than 65
From the threads on here and reading elsewhere, buy to rent is no longer the nest egg it once was.
A friend has several properties and does well out if it - but he isn't doing it on a shoestring and has very high equity in the properties. If the property is mortgaged to the hilt, you're working part time - how will you fare if you have a down period with no rental income?
Another friend purchased recently, a small house zone 5 in London, She was looking for a property for almost a year, most of the properties available were ex rental, BTL landlords leaving the market.

I rent out a house but have no mortgage. It makes a modest income, most of which I don't touch as it might be needed to pay for something at the rental place. I can't see how you could make a profit on a BTL that would be worth the hassle.
I'd look at additional voluntary contributions to your pension. There's still enough time to make that worth doing. Very safe and if your employer is in the schemes you get a generous rate of matched funding.

This is bonkers, sorry! You need to pay any spare money into your pension and your own mortgage. Then think about saving for your retirement. This is not the way.

It's not a good time to go into the rental market.

Many landlords are leaving it. Reasons include high interest rates and upcoming expected changes in the law giving renters more rights.

As a landlord you would have responsibilities to the people renting your property and thus can result in high and unexpected bills.

Not a good idea.

If you live in the SE then when you retire you could consider moving to a cheaper area.

Don't forget you would be responsible for maintenance of the rental property, of the boiler breaks or fences fall down etc you have to pay to repair

Radical thought but have you thought of moving somewhere cheaper, thus getting more bang for your bucks? As teachers you should be able to find jobs elsewhere,

I would invest as much as you can. To have rental you should ideally have a cash cushion to cover maintenance or periods of not getting rent. You could (maybe) consider it if you do have more saved up to cover emergencies related to the rental. I would probably just save and invest as much as you can. You already have wealth in your house, having wealth in investments would make you more diverse.

I'm a bit confused - where will you get money to buy a second property? I don't know if you'd even qualify for a second mortgage, plus you'd have to find money for deposits + fees. Presuming you have that capital, wouldn't it be better in your pension?

Hi OP, what jumps out at me is that you live in the SE. If you are both teachers you can work anywhere - why not relocate to somewhere with very cheap housing but decent quality of life?

We have pension-less friends who moved to Hexham in Northumberland - lovely place, good schools that you could teach at, cheap houses. Once you have jobs there and a much cheaper 3 bed house, then you can decide what to do with the remaining equity in your current (expensive) house - re-invest in a BTL that you can keep an eye on, or just a straightforward conservative investment portfolio.

Wish you the best of luck - it's awful to feel trapped but I feel like living in the SE is a big part of your struggle.

Moving with SEN children isn't a simple task, especially if they have EHCPs. Their dc could be without a school place for months before suitable placement is made available. Not to mention being on the waiting lists all over again for any council funded or tertiary services. It could put their children back massively in their social and educational development. Not to mention the MH of the parents as they navigate the new landscape without any of their own network to tap into for support.

I say this gently, you aren't mad but you are poorly informed about the idea of a rental in so many ways that I would make a decent bet that if you pursue this you will end up in a worse position.

For starters, yous need to raise capital for a second property, lead8ng to a higher existing mortgage assuming you borrow agaonst your exosting home, then getting a second mortgage at your ages with reduced hours and dependents, the general market at the moment and instability of mortgage rates mean you can't guarantee making the monthly payment each month. A buy to let will have a higher interest rate anyway, you'll be borrowing a huge sum with a low deposit, and if you aren't doing interest only you'll find things very tight, if you even break even.

It's a terrible idea.

Speak to a financial advisor.

There are sadly no shortcuts.

Please don’t do this.

Non paying tenants take upwards of a year to evict via courts, and for that whole time you’d have to cover the mortgage without income.

You’ll also have the associated repair costs etc.

And that’s without considering tax implications of a second home etc.

Unless you can buy outright or afford to cover the mortgage with your own income or savings, you risk destroying your credit rating by defaulting on the mortgage if you have bad tenants.

You also need a minimum 25% deposit for any BTL property as another consideration.

It is unlikely a second property will generate enough income to pay for itself and you cannot rely on longer term appreciation as a pension. You would be better buying a family home more suited to your needs. Can you get financial advice via a union?

I hear you, OP, it sounds like you have a lot on your plate and the worry about the future must be weighing on your mind.

I agree with others that your property in the SE is a real asset. I appreciate what @NDandMe is saying about moving SEN children: that is a real consideration. But maybe it's something you could consider when the children are no longer in education. You could release money from your existing property and perhaps buy a BTL outright at that stage. There are spots in the SW like Gloucester and Chepstow where property is much cheaper and you would have access to lovely countryside (if that is your thing).

1. Your very unlikely to get a mortgage at your age
2. You need at least 10-15% deposit for the property
3. They will assess your personal costs as part of a BTL mortgages.
4. You may struggle to pass the stress tests for a mortgage with a 90% mortgages

IF GET THROUGH ALL THAT

1. Tenants may not pay rent - you now have 2 mortgages to pay
2. I make about £5 a month from my rental after
3. Most money goes to the bank interest and I've had a extra electrics bill of £250, Gas issue £270, Tax on rent £1200. Any more issues come out of my pocket.
4. If I sell, I have to give the government 28% of my profits for CGT

DON'T BUY A 2ND PROPERTY IN YOUR SITUATION

I became an accidental landlord after the 2008 crash

Long story not that different in some ways to you

BUT as soon as the tenants moved out we sold up, various reasons BUT if the rented house 'went down' then it could take my wife & I with it financially.

If you can afford not getting any rent or have a portfolio of property it might work but it could bankrupt you

This isn't a great idea for all the reasons already stated. It would be better to increase your income and then savings. Tutoring perhaps? Are you getting all your benefit entitlements for your children? Can you top up your pension? That's probably a better way to go to ensure your future financial security.

This. We are LL’s and I wouldn’t recommend it for anyone looking to just have one property, it’s could end up disastrous especially with the new legislation Labour are bringing in. Most small LL’s are getting out.

I have seriously thought of switching my holiday let to a tenancy but each time it's a no

The arguments against now are just too strong for a small landlord even though rental prices are soaring.

I've just seen the problems a friend of mine has with trying to evict a non paying tenant who has caused damage to the house through deliberate acts. Her legal bills are horrific. And this is before tenants rights are further strengthened.

I agree. Buying a second property on a low income is a bonkers idea. Could you do some tutoring in the evening or weekends to boost your income when your DH can do the childcare.

I've x 2 rentals but put a good deposit down so have the benefit of good mortgage rates. It is up and down though and some years I've barely made any profit via the rent. The financial success has been the increase in house prices. I'm in it now having purchased many years ago but I'd think twice as a new landlord.

This sounds like madness

You need a different side hustle.

What about private tutoring, eg for 11 plus??

I have looked at a possible rental too so not totally anti, however with all of your responsibilities and two stressful jobs I wouldn't do it.

You said you live in the south. Could you consider a move? Sell your (assuming) valuable house, pay off the mortgage and buy outright elsewhere. Perhaps even gaining a larger property more suitable for your DC’s.

You have the advantage of both of you being able to teach anywhere (in England is more straightforward) and with a shortage of teachers, moving jobs shouldn't be a blocker.
Hope it turns out for you @TheArts