Viewing / Buying a house

[lapal_fan]

13 minutes ago, ender4 said:

Yep, someone i work with who is on average UK salary and so is her husband....  in the last 4 years they have bought 4 houses for BTL.  I don't know how they are doing it. 

But as interest rates go up, won't they just increase rent to keep the houses?

inheritance? 

[tinker]

29 minutes ago, ender4 said:

Yep, someone i work with who is on average UK salary and so is her husband....  in the last 4 years they have bought 4 houses for BTL.  I don't know how they are doing it. 

But as interest rates go up, won't they just increase rent to keep the houses?

 

16 minutes ago, lapal_fan said:

inheritance? 

Could be but if there anything like the people I know they buy the 2nd house on the equity of the 1st property and then repeat this. One I know has £1m portfolio in houses built up over 10 years, fair amount of equity now though. He used Interest free credit card for the legal fees and stamp duty. It's worked well for 10 years but my god this is a perfect storm for them. 

A house to me is to live in and a standard wage should be able to afford to buy a decent house, 3 bed semi should be £150-£200k.

The next generation of workers 18-25 year olds stand no chance at the moment and if they have a student loan it further fuxks um up. If i was that age I would be off aboard, USA, Canada, Australia or wherever. 

[sharkyvilla]

My mortgage is up for renewal at the end of March and I'm moving lender so they have decided to do a remortgage valuation.  I've never had one before, anyone know how in depth they usually go?  I bought my flat for £187,500 4 years ago and the advisor put the value down as £200k which seems fair enough.  Is it mainly structural stuff they look at or go further like looking at the kitchen/bathroom etc?

[Genie]

15 minutes ago, sharkyvilla said:

My mortgage is up for renewal at the end of March and I'm moving lender so they have decided to do a remortgage valuation.  I've never had one before, anyone know how in depth they usually go?  I bought my flat for £187,500 4 years ago and the advisor put the value down as £200k which seems fair enough.  Is it mainly structural stuff they look at or go further like looking at the kitchen/bathroom etc?

Are they actually visiting you? Usually they just take the price you paid and then apply the average market change over that time. Edit; I just remembered for my last one they visited. It’s a very light look around and then they compare to other properties in the area that have sold recently. 

A higher valuation is good as it means your loan to value ratio is better (and potentially unlocks better deals).

Edited February 22, 2023 by Genie

[sharkyvilla]

3 minutes ago, Genie said:

Are they actually visiting you? Usually they just take the price you paid and then apply the average market change over that time. 

A higher valuation is good as it means your loan to value ratio is better (and potentially unlocks better deals).

Yes they're coming on Friday afternoon.  The advisor said they probably wouldn't bother doing a physical one as you say, so it's a bit annoying.  I'm paying a chunk of it off so it's only a £50k mortgage and not much risk for them.

[KentVillan]

On 12/10/2022 at 16:33, lapal_fan said:

inheritance? 

This is usually the answer when someone with an ordinary job suddenly buys a massive house. And then typically they lie about it and say they saved for 20 years, or played the mortgage market really well, or made money on a previous property, or whatever.

But could also be an insane amount of debt which will come back round to bite them.

There isn't a lot of justice in the property market, best not to think too much about what other people are doing!

I don't really get the BTL obsession. There are easier and safer ways of multiplying your money, and going all in on BTL exposes you so much to a sudden change in the markets. Makes more sense if you're already very wealthy.

[foreveryoung]

I want to remortgage my flat that I rent, did it previous with no issues, my mortgage guy, who I use, said it cannot be done now without tax returns. There is no profit in it, so I have never done them, but he insists I need them, even to show losses. Costs me about extra £100 a month with the mortgage rates and service charges going up every other year, so I'm not sure where to go on it. Surely if I show losses, it's less likely to get a good deal.

[Xela]

1 hour ago, sharkyvilla said:

Yes they're coming on Friday afternoon.  The advisor said they probably wouldn't bother doing a physical one as you say, so it's a bit annoying.  I'm paying a chunk of it off so it's only a £50k mortgage and not much risk for them.

Physical visit for a £50k mortgage on a £200k flat. They must have no other work to do! That should be a desktop valuation all day long. 

[Xela]

54 minutes ago, KentVillan said:

I don't really get the BTL obsession. There are easier and safer ways of multiplying your money, and going all in on BTL exposes you so much to a sudden change in the markets. Makes more sense if you're already very wealthy.

I think the glory days of BTL are gone. I'd rather put a few hundred grand into the world markets and wait it out. You will get dips etc but its lower maintenance. The thought of dealing with a non paying tenant would fill me with dread. 

Edited February 22, 2023 by Xela

[Loxstock92]

51 minutes ago, foreveryoung said:

I want to remortgage my flat that I rent, did it previous with no issues, my mortgage guy, who I use, said it cannot be done now without tax returns. There is no profit in it, so I have never done them, but he insists I need them, even to show losses. Costs me about extra £100 a month with the mortgage rates and service charges going up every other year, so I'm not sure where to go on it. Surely if I show losses, it's less likely to get a good deal.

Some lenders will base it purely on the rental income and use what your payments will be on interest only basis using a reference rate.

 

lender I work for used to use up to 5.5% ref rate,  now it’s up to 7.5% which has really reduced a landlords ability to release equity. You’re going to see it across the market unfortunately with the new norm of higher rates than we’ve been used to in recent times. 
 

have you checked your current lender for their rates? You might find it’s not too dissimilar to what’s out their already.

[Loxstock92]

1 hour ago, KentVillan said:

I don't really get the BTL obsession. There are easier and safer ways of multiplying your money, and going all in on BTL exposes you so much to a sudden change in the markets. Makes more sense if you're already very wealthy.

My personal view is that with savings rates plummeting post GFC people just looked for an easy way of getting a good return on their money. What’s easier than buying a house and collecting rent. Anyone with money can do it

[KentVillan]

18 minutes ago, Loxstock92 said:

My personal view is that with savings rates plummeting post GFC people just looked for an easy way of getting a good return on their money. What’s easier than buying a house and collecting rent. Anyone with money can do it

Sticking all the money in a global equities tracker fund. More liquid, more diversified, no hassle. Would have made a killing doing that through the post-GFC bull run.

[ender4]

18 minutes ago, KentVillan said:

Sticking all the money in a global equities tracker fund. More liquid, more diversified, no hassle. Would have made a killing doing that through the post-GFC bull run.

Both a BTL house and global tracker gives you roughly a similar yield over the long term (20 years +).  

A BTL is more hassle but you end up with a free house at the end of it. The house is also worth a lot more than you bought it for.  
 

Also you put £100k in a fund, you get a % growth on £100k.

Whereas on a BLT, you get yield on £350k (assuming a x3.5 mortgage).

[KentVillan]

13 minutes ago, ender4 said:

Both a BTL house and global tracker gives you roughly a similar yield over the long term (20 years +).  

A BTL is more hassle but you end up with a free house at the end of it. The house is also worth a lot more than you bought it for.  
 

Also you put £100k in a fund, you get a % growth on £100k.

Whereas on a BLT, you get yield on £350k (assuming a x3.5 mortgage).

The house isn't free, you've had to take on considerable risk to buy it. Basically the equivalent of buying the global tracker with a credit card. I think a lot of people are about to get a nasty lesson about market cycles and leverage soon.

The reason a mortgage makes sense for buying your primary residence is everyone needs a place to live in anyway, so you'd be renting if you didn't do it, and you probably wouldn't be able to afford a house without a mortgage.

It's a much riskier investment when you start using leverage to turbocharge your returns in the way described above. People just assume the downside scenario can't possibly happen. But you've got a leveraged, concentrated bet on an illiquid asset. That's big boy stuff, I don't think people realise just how much risk they're taking on when they do this.

Edited February 22, 2023 by KentVillan

[AlwaysAVFC]

Delivering to 3 new build estates today and I've got Platform housings rent increase letters. It highlights one big reason for high house prices. While more social housing is required, there are very few of the small 3 bed and 2 bed houses that are privately owned. They are either general housing or shared ownership. With so few available it will drive the price up and have a knock on effect all the way up the ladder as well as meaning more demand for social housing as its hard to be able to afford it.

[Lichfield Dean]

21 hours ago, ender4 said:

Both a BTL house and global tracker gives you roughly a similar yield over the long term (20 years +).  

A BTL is more hassle but you end up with a free house at the end of it. The house is also worth a lot more than you bought it for.  
 

Also you put £100k in a fund, you get a % growth on £100k.

Whereas on a BLT, you get yield on £350k (assuming a x3.5 mortgage).

I got a BLT once, it yielded me a packet of crisps and a bottle of orange juice for £3.50

[sidcow]

34 minutes ago, Lichfield Dean said:

I got a BLT once, it yielded me a packet of crisps and a bottle of orange juice for £3.50

That's going to be £4.50 now, minimum. 

Edited February 23, 2023 by sidcow

[sidcow]

22 hours ago, ender4 said:

Both a BTL house and global tracker gives you roughly a similar yield over the long term (20 years +).  

A BTL is more hassle but you end up with a free house at the end of it. The house is also worth a lot more than you bought it for.  
 

Also you put £100k in a fund, you get a % growth on £100k.

Whereas on a BLT, you get yield on £350k (assuming a x3.5 mortgage).

But if you reinvest dividends you get the market growth plus dividend growth which compounds. 

I understand that long term the stock market usually outperforms the housing market.  And as others have said it's pretty liquid and you don't have to deal with tenants causing trouble, not paying up or ruining the joint. 

Edited February 23, 2023 by sidcow

[Xela]

1 hour ago, sidcow said:

But if you reinvest dividends you get the market growth plus dividend growth which compounds. 

I understand that long term the stock market usually outperforms the housing market.  And as others have said it's pretty liquid and you don't have to deal with tenants causing trouble, not paying up or ruining the joint. 

I read somewhere recently that £100k invested into an S&P500 mutual/tracker fund in 2001, would have been worth £452k now. Thats not bad considering you would have invested through 9/11 and the war on terror, a global recession and a global pandemic!

Not much hassle and can be managed from your armchair. 

[Genie]

There’s savings accounts now at circa 5% interest, that’s easy money and no risk.