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.......

Roneik, I can't see how there will be a full on crash (20% or more) in these times with so much pent up demand. When do you predict this will happen? I was going to buy this year, but have baulked at the month on month price increases, which have now ground to a halt, but not reversed. What makes you think prices won't just stagnate, rather than crash?

One thing that can avoid a big delay is checking if the buyer has their mortgage in place

While everyone is talking of a crash, I personally am buying. One thing most have forgotten is that during next year you can take out your pension in a lump sum and what is to say that people won't be buying Ferraris but investing in flats. This time next year there is going to be an awful lot of money flooding the market.

There might be an adjustment later but I bought my first property in Central London for £17000. The terraced house I bought in 1985 for £36000 is now up for £500000. The house I am in at the moment is up for sale for 500% more than I paid for it. I somehow think it is not going to go back to those prices.

Look there is a lovely couple renting a couple of doors away from me, and even though they are both working they cant get a mortgage . That's the problem . Pent up demand hey come here and you will see houses sitting page after page on rightmove. There is no pent up demand.Thats vested interest talk. There are however many who would like to buy but cant for reasons beyond their control.That is fact.
The prices of houses are reversing, it has started. Even London is seeing drops sometimes several reductions.
You have to take the time to research areas , look at the history on zoopla of reductions of any particular property.I believe that by this time next year if they are not 20% or more below today it will be a close call.

What in conspiring against property is amongst other things is that caution regarding the risk of default is being factored in before granting a loan.
Our economy is not what it seems , the GDP has been manipulated like so many aspects of the economy to look good. We might be found out soon when the markets realize most of the GDP increase is 2.5m increase in population and not in any way production of goods
Actual sold prices land registry are nearer the truth

Theyre cash buyers.

Db is happy.

It's been profitable up to now for the BTL and flippers, but the music has changed , unless you are into HMO it's over. There will be those in the media and government into property trying to ramp it up

They have to it's there free ride or the economy gone if the pyramid ponzi goes pear shaped

Wait a year or if you can afford to risk 7% interest rates when it all comes out of the cupboard after the election
Regarding awash with pension money. I could have taken big lump sum but did not Not all grey haired people want to live on a wing and a prayer

Just shows how desperate Osbourne is , he knows as I do that it game over

Property will revert to max 4x ratio

I've been following this thread with interest. Glad you feel comfortable with your choice and buyer op.

We'd been trying to buy a house round here for 6 months. We're cash buyers and at at least 3 properties worth 350k plus and we have been outbid by other cash buyers every time. The commercial property sector is certainly picking up big time here too.

I've just made the opposite decision and signed a 5 year fix on a buy to let. I can't see a better return on my money at the moment and I do intend to be in it for 10 years plus.

To add fuel to the fire over 230.000 planning permissions have been granted this year under the kick a nimby new laxer planning regulations

That's good Roneik (for us). Dh owns 6 acres of land on the edge of a village. There's actually the village, the land and then one last house.

He reckons we wouldn't get planning permission but I keep saying that I think we would.

Well peanuts you are in a lifeboat and I do hope your paddles wont be confiscated.

As for outbidding , that's so yesterday now they are cancelling due to no sucker to buy their manky old vic terrace for 450k

Once even a sniff of no profit hit's the air conditioning it's " for gods sake wheres the bloody door"

Sold subject to contract is code for the chain broke in many cases now

The other problem is when the purchase needs a mortgage and the valuation doesn't share the bidder's optimism

Very well put and you beat me to it

I am a southerner and to see the poverty in some parts of the north is an eye opener.
I think people in the south east have become detached from the reality of the state of this country

Maybe they would be on a different wavelength if they got out more lol

Our property is a site I use for history of house prices. You have to sign up to have access to the history of prices part, goes back quite a way too

www.ourproperty.co.uk/

Have toyed with btl but to be honest it seems such a hassle - unless it is your business and you have more than one. Over the years I can't help thinking that you have to pay out a lot for repairs etc and that eats into any profit. Even if its good condition now, 10-15 years down the line bigger things will start to need replaced. What about investing in stock market? Max out a stocks and shares ISA, invest the rest in a range of funds, and over 10-20 these should produce a good return minus any other expenditure and hassle. OK returns are not guaranteed but neither are property price rises.

Quoted companies issue 137 profit warnings in first six months of this year, up 9% on first half of 2013, despite " it's the recoveraaah don't ya know " Osbourne and Carneys alleged improving economy

This is yet another reason I believe the housing market will crash

job insecurity

But for most areas it never crashes so much that it goes back to what the prices were 10 years before. Then it starts to rise again and it always exceeds the top price it was before the "crash".

Read somewhere this has been happening for the last 1000 years

Df rented her council house at the same time we bought. 30 years later df is paying 5x the amount we are paying in mortgage on the rent. Apart from a period of time in the early 90s we have never paid as much mortgage as she has paid rent on any given month.

Having said that df and her dh earn and always have significantly more than us. it took us 3 jobs each to save for the deposit for our first home.
Df would also never dream that her dc go out to work whilst they are still in school. Our dd holds down 3 jobs and has her own money to do with as she wishes. Ds will get a Saturday job and anything else he can pick up when he is old enough.

Ourproperty site gives a skewed average property sale price. Looked at it for my particular road that only has 10 houses on. It says that there has only been 4 house sales since 1997, there has been 7. So impact on average sale price is huge and is over such a long period it is pretty meaningless

Yeah our property is way off for where we are buying and selling. About a third. And the purchase price on ours from 10 yrs ago is wrong.

Here is the latest land registry report:

www.landregistry.gov.uk/__data/assets/pdf_file/0010/96805/HPIReport20140721.pdf

Growth is now pretty flat. Why do I get the feeling we are now sitting at the crest of a roller coaster ride?

Our Property is ok when there is a high churn of property

You wont have long to wait to see that property has for various reasons reached a point of no return. It's quite likely too that when it crashes it will not return to current values in the foreseeable future .

There has not been a historical property scenario to compare to the present

www.dailymail.co.uk/news/article-2707944/The-worst-time-buy-home-three-years-High-prices-rate-fears-confidence-market-plunge.html

The fact that the Land registry does not publish BTL sales should worry people even more

Buy to let is going to crash and burn if it's leveraged and interest only, ask the Wilsons .

They are selling 1000 properties , or they think they are going to be able to lol. One thing in their favor they have had some for quite a few years

All in a small area of Kent, that should do local values a lot of good

Why do I get the feeling we are now sitting at the crest of a roller coaster ride?

Hey have some thought for the BTL landlords who are strapped in and wont be able to exit the ride

Permanently strapped in while values crash

many so leveraged that their own residence will be under threat

This is one of the comments on that article

I have to say this anyone thinking of buy to let read carefully

Quote.This reminds me of 1988, then it was over heated with double MIRAS ending, this time it's interest rates. Only mugs are buying in the SE and London. Property is an excellent investment, but not when you buy at the top. For those who missed it, labour are discussing re-introducing regulated tenancies, which in truth is a very good idea, the consequence is BTL property in particular will take a hammering in value, maybe down to 30% of it's current value as happened last time back in 1977. After the election the UK's debt will have to be dealt with, and that tripled in the last ten years, or the £ will fall. The UK is in terrible trouble because of our 99% debt to GDP ratio. Debt will be our undoing.

Read more: www.dailymail.co.uk/news/article-2707944/The-worst-time-buy-home-three-years-High-prices-rate-fears-confidence-market-plunge.html#ixzz38lgLM9UL
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