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.......

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.

But house prices even if they crash will not return to the top level of the late 80s.

On this thread we have people saying very few are going to get a mortgage because of the banks etc factoring so many what ifs, on the other hand the Market being flooded by ex BTL properties.
So where exactly are people supposed to live. I actually think everyone has just made an argument for BTL.

Then there is someone quoting a doom and gloom article from Money Week who also issued articles saying the end was nigh in 2013.

If you issue articles yearly saying the end is nigh then one year you might get it right.

Oh and I sold all my BTL properties from January-April 2007. Then picked up some in the last few years. Which I have now sold. However I am now dipping my toe back in. I think there was pent up demand for housing that people went out and got caught up in the furore and that led to the dramatic increases over the last year or so. That is now dying down. There will be a rise when people get access to their pension money, then it will die down but then start to steadily rise again.

I think you can take out £25k tax free which is more than enough to buy a property in some areas of Britain.
Or to use as a deposit on a BTL property. Some BTL mortgages allow you a mortgage till you are 80.
Also I think you will find the rise of the owner occupier BTL. Not strictly legal but there are far fewer restrictions on getting a BTL mortgage than getting a residential mortgage.

runforfun

But house prices even if they crash will not return to the top level of the late 80s.

Never say never , Japan has seen falling prices for over 20 years

BTL up to the age of 80 i.e 25 years interest only for someone aged 55, with certain mortgage companies is no different %age wise than other BTL mortgages.

It is when you hear that with a residential mortgage you are not allowed to be over 45, and it is repayment only. Just to add we had an interest only mortgage 14 years ago and are selling so as we can be mortgage free. We need to move because of job and colleges to a cheaper area so we will be buying a far better house with no mortgage and money to spare.

But no one wants to live in Japan. We on the other hand are part of the EU and it appears that everyone wants to live here

Also should add we know Japan very well and you are comparing 2 very different types of people. I doubt you would get as many self starters in Japan as in the uk

Sorry but they had a mega bubble that burst 20 years ago, and they never have recovered despite having a real industrial based economy.

We have a mega bubble that is just starting to burst
We are forever blowing bubbles

Japans bubble never reflated

Whistles " forever blowing bubbles"

www.oftwominds.com/blogoct06/japan-bubble.html

This country however has not got a strong industrial base as had Japan

When you shrink the m4 (money supply and velocity) as is and had happened here in the last few years , you run a risk of deflation as people have less money to spend . That causes prices to drop eventually hence you can end up with a shrinking economy

That's part of the reason why QE was brought in

Japan has been fighting deflation for years , too much money going t
o BTL and mortgages in the uk .

I am not an economist but unlike a lot of BTL I do have some grasp of where we are heading, I would be happy to concede I am wrong if someone can come up with evidence to the contrary

Meanwhile the crash prediction is on and ignore at your peril

Was right last time (2007/8) and certain this time

www.marketoracle.co.uk/Article16059.html

I too saw the crash coming in the late 80s and end part of 2007. I was in BTL both times and sold both times. Kept my home and rode out the storm.

I think quoting Japan is a red herring. We are completely different economies. We also have differing immigration figures. Unlike Japan we have people flocking here where as Japan has the prospect of a declining population. It all comes down to supply and demand.
Less people = cheaper housing
More people + not enough houses= higher house prices

No their properties went up off the scale , and you need a multi generation mortgage to buy

If it makes you feel better then just for you I will say

Properdeee will go up forever never crash

There I said it although I am now torn between smashing the computer screen or surfing for a mortgage company that will lend a burnt out pensioner vast amounts of money that would ONLY take about three lifetimes to repay the mortgage

The lender will be in the doo doo if I get dementia and a ciggy burns the plucking thing to the ground

I wonder if I will be able to run a property empire like the Wilsons ONLY 1000 properties . All I need is to put on some weight andn wear some awful clothes , talk like a chav and biff the odd tenant

I might even become a star on homes under the hammer

I met my buyers today. They are going to BTL.

But to students, so turn the front room into a bedroom and fit 4 people in. They'd get at least £800 a month compared to £600 a month if its kept as a family home.

I had thought about that myself but thought it would be even more stressful than normal tenants.

Could they not have racks and stack em up, get 12 to a room , or even hot bed them to polish night workers lol

It's over you did the right thing

Of course I don't believe landlords big or small biff their tenants or all talk like a chav.

They collectively have though, pushed up the price of property and been a part of creating the bubble that will pop possibly bringing down the economy

"I had thought about that myself but thought it would be even more stressful than normal tenants."

Not at all. "My" students were my best ever tenants. Their parents had to be guarantors, so the place was kept really nice and neat, and they paid their rent on time every month.

Well done selling so quickly. Good job!

Just a quick comment before i burn the dinner, there is plenty of housing supply, homes in London can easily be divided into smaller units, our homes are still quite large. This isn't about supply snd demand, its about cheap lending. Those that have managrd to borrow are being greedy with rents, simply because they can. Tenants are desperate and have no choice, landlords simply have too much power.

I dont like to say it but bugger I will "told you so "

Today's papers reporting London property prices down 5.9% last month ,and all but extreme north going quickly to burst a bubble mode

We are not doomed we are @@@ up the plucking creek

So glad OP didnt sign for the BTL.

No UK government has ever or will ever rein in the housing market simply because the need the money bought in by stamp duty to fund their various projects. £43billion was paid in stamp duty from 2003-2013 and most BTL LL paid tax on the rent they receive. No government is going to kill the goose that lays these golden eggs.