I'm meant to be signing a buy to let mortgage next week and am getting cold feet

[GalaxyInMyPants]

I inherited half a house recently and am in the process of buying my sibling out. First of all we were going to sell it and I arranged valuations, etc. then I decided I'd buy it.

I need a 70k BTL mortgage which the bank has said I'll get no problem.

I have a tenant lined up, someone I know. And I do trust that she'll look after it.

But I know that long term she won't stay there....maybe two years. After that I'd be looking for tenants. I keep hearing horror stories on here and in real life of nightmare tenants, or just the general expense, etc of a BTL.

My mortgage repayments would be £470 a month and rent £600. So after tax, insurance there's not a lot of money to save each month for repairs, new carpets, etc.

so short term I think it might at times cost me money and that's not even thinking about empty periods.

Long term I'd have the benefit of someone else paying my mortgage off. In 15 years I'd be mortgage free and could maybe think about retiring earlier than 67.

I worry if I don't buy this house that I will be working till 67. But then it would be nice to have some money now and enjoy life a bit more rather than having to be careful all the time.

If I don't buy the house I now feel I'd be letting down my friend who's excited about moving in and also my brother who's waiting for his money. Though he'd get it after we sold the house I guess.

Interest rates are meant to be rising. So that worries me a bit about the mortgage. If we sold the house I'd end up with about 70k cash, which I could try and save most of it I guess so I might be able to retire at 60 if I've got good savings still. And rising interest rates may help grow the money.

Then I think well I could try the buy to let and if it doesn't work out I could sell it down the line.......

Yes, I read that when it first came out. There may be something in it, but people have had years now - is it 5 years of rock bottom rates? - to get their financial affairs in order. We've certainly taken the opportunity to do so. And rates haven't gone up yet, and there's still uncertainty as to when they actually will, so there is still time to prepare.

Crashists have been saying 'rate hike, prices plummeting, crashy crashy' for years now. I can't see it anytime soon.

We have too. Rather than spending the "extra" money we've put every penny we can towards paying off the mortgage in readiness for higher rates.

But thousands and thousands of people haven't.

I didn't want to read the 'end if Britain' article but I was brave...

It makes scary reading for someone like me; an ordinary family person with young children and an average income having to purchase a suitable home to fit our needs - and borrowing significantly! We are NOT being extravagant either!

But the best bit is where it says interest rates are being kept artificially low to benefit government borrowing and it must stay that way for a long time. We could wear 3-5% raises but I don't know about higher than that. What choice to I have anyway!

All you can do is be aware Lelivre and you are. Keep debts to a minimum. Overpay your mortgage if you can. Even a little here and there helps. And carry on living your life, and not too much on the 'what if' scenario.

Rejoice GDP is back at 2008 levels

But and this is the bit not put on display ,we have a lot more public sector debt. Wages are down average £1.600 pa per worker.

We have had PPI , help to buy QE FFL 0.5 base rate as props to a failed economy.

Most of the above are going or gone.
Where I live houses are being chopped up as HMO s at a rate of knots.

There are umpteen rooms to let sites, food banks, advice centers for those in debt.

At the rate HMO is expanding it makes you wonder how long before another problem is formed , and that's mass voids on flats and houses.

As for the comment about paying off while rates are low, I think most of that has gone on many new cars.

How much of that GDP is sent back to Poland ? How much of the GDP is QE investment money ? Not manufacturing output

That's the problem roneik we are not using the "extra" cash in the right way. Whilst some of us are using it to pay down our debts to put us in a better position when things get worse, others are seeing it as extra cash to spend and buying into the silly "why pay off your debts when interest rates are so low" message or else have stretched themselves to afford their current lifestyle meaning that they could face problems in the future.

Nobody can say for sure what is going to happen but the likelihood of things staying the way they are is miniscule.

What Roneik says is correct. The other point I would make that bringing public debt debt down by reducing public spending is pointless as most of our debt is due to bank bailouts, or QE investment.

This is the biggest whitewash and it won't take armageddon to change it. And there won't be a crash. It will happen gradually, we won't notice much until one day we might be saying 'I think I might end up paying less per month if I rent, actually'.

Does anyone see large supermarket trolleys all filled to capacity , computer say's no

Does anyone see all the empty boarded shops opening up , computer say's no

Does anyone see Wonga loan companies going under , computer say's no

Does anyone see the government accepting technology will continue to take away employment and find an answer to the problem

It's the rich that have recovered to a higher level of wealth, whilst millions are having to adapt with less

This is a blip , there is no recovery just survival and nothing looks like changing any time soon

Everyone needs to be able after paying for food and shelter have money to input into the economy for it to grow and that's not whats happening for millions

www.measuringworth.com/ppoweruk/

You would need nearly a thousand pounds more today what would have cost £2000 in the year 2000

So you would need £3000 sounds like a recovery to me with wages stagnant since 2000 or before

The signs are pointing towards a house price correction, for the many reasons outlined above. Very sobering. I wouldn't buy a house now for love nor money, unless I was going to be living there for the next 2 decades.

Well there's three viewings on the property tomorrow including two buy to let investors.

I think it's a good decision to sell up, galaxy. The market is really slowing down so fingers crossed you get a sale quick.

That's great news Galaxy, have you decided what to do with the money? Do you feel like you've let go a bit now?

I know it's hard with all those memories.

Another announcement to level out house prices is that they're going to allow children with pupil premium priority to state schools. This means that the extra 200k that people spend on a house in London that's close to a good state school might be money wasted. And in house price terms it means levelling out across areas, less movement therefore less demand and more stability, all of which keep prices steady.

The end is nigh methinks.

Nobody can say for sure that interest rates will not go up to historical rate levels 5/7%
The government don’t have full control of rate setting.

Lots of scenarios can influence the rates, Regarding sitting out a crash, some will but the crash will happen regardless as has previously. What determines prices is how many repossessions and inherited sold at lower prices. This sets the price in a postcode downward, confidence plays it’s part too, as do downward valuations by lenders. The government have to take into account what other economies rates are , if the USA starts setting theirs higher we will have to follow.

Forgot to mention the ability to borrow enough with the new rules and spending habits criteria

Several banks have already made it policy to have no more than 15% of loans at 4.5 and above on their books or granted forward.

That will exclude a lot of buyers

Out of interest regarding this talk of a crash; what defines a housing crash and when was the last one? 2008 or late 80s?

IMO the 89/90s 'crash' was a blip compared with the current situation.

The 90s crash was primarily caused by the ending of joint miras and to a certain extent interest rates and unemployment. The difference was that the banks wouldn't go bust if prices corrected.

This time, the banks are in such huge mess and globalization has become so endemic, that the UK is going to realize that a recovery is not going to happen.

house prices haven't crashed, I know, in my view due to the benefits system and immigration. This situation is not sustainable and will eventually cause a collapse.

1990s saw rates halved, the cuts starting almost as soon as the property crash got under way, yet prices continued to fall.
A relative picked up a Victorian end terrace for 29k it was a repo . This was off the A12 Harwich Essex. It was just as the prices stared going up again

I would describe a crash as a time when very little is selling and prices have gone down more than 20%. There were properties in the 90s that went down a lot more than that. I looked at a pet shop with flat above for a relative £16000 kicked myself that I did not have the money to start a business at the time

Sold it for the asking price.

IMO 2008 was definitely not a crash

Congrats galaxy, you did well to achieve asking price. Lots around my area are on price reductions and still not selling. I keep a close eye on my local prices.

Well done OP, hope the transaction goes smoothly and speedily. Is your DB pleased?

Galaxy, that,s good news . Now you have to make sure solicitors and surveys are in place by the buyer, and keep shunting your solicitor to keep everything moving. The estate agent needs prodding as well