Reply to: Want to buy a broom cupboard in London, how to borrow the £££

[TykeMerc]

2 questions arising from the thread so far:

(1) if I bought a small place now, would that give me more leverage later once I'd got together a second down-payment in a few years?

(2) Could I mitigate the risk of buying somewhere (theoretically, not considering where I would actually live) if I rented it out and used the rent to pay off the mortgage on a flexible 'account-style' mortgage? I remember Virgin offered a type of mortgage you could pay into and take out of. During good times, the high rent could pay off a lot of the mortgage, during bad times, poor renting market etc, I could just pay off the interest or even dip into the mortgage.

1. Well money invested in property appreciates as fast as the property, what you're describing (albeit in a roundabout way) is getting onto the property ladder and moving up as you can afford.

2. Well if you buy somewhere to let out then you need a BTL mortgage and those don't tend to be of the offset type. The Virgin product you're thinking of was a flavour of offset. If you buy a property and don't live in it then you've got to lay out your own rent as well as pay the mortgage, even though you will get rent in you will have to balance the budget.

[adam42]

2 questions arising from the thread so far:

(1) if I bought a small place now, would that give me more leverage later once I'd got together a second down-payment in a few years?

(2) Could I mitigate the risk of buying somewhere (theoretically, not considering where I would actually live) if I rented it out and used the rent to pay off the mortgage on a flexible 'account-style' mortgage? I remember Virgin offered a type of mortgage you could pay into and take out of. During good times, the high rent could pay off a lot of the mortgage, during bad times, poor renting market etc, I could just pay off the interest or even dip into the mortgage.

[fullyautomatix]

Its possible

Get a 500£ per day contract.

Register for an off shore loan scheme.

Pay peanuts in tax due to tax loophole.

Invest in property using the offshore trust, no stamp duty.

If you get HMRC letter, go bankrupt.

[Peter Loew]

You have been watching too much of those property tv shows lately. Please don't forget you're not pitching to real estate agents or investors, we are normal people with normal day jobs.

Actually I do not watch TV. Normal people with normal day jobs.. aren't you a contractor?!

[Peter Loew]

Sorry I thought you meant spend £100k split over 3 properties
Definitely at around the £70k mark you start being able to buy houses in reasonably OK areas and let to working families, or even students, for probably around £500pcm.

Yep

[mrv]

Doesn't have to be a 40k house, but there are some nice properties in semi-decent areas to be had. I've seen solid flats in private developments that would make a good investment. Mortgage, if you're going that way, will be easy - BTL interest only and you could put a high deposit down, let's say on an 70k/80k property - ideally get a freehold so you don't have to deal with any service charges depending on your preference, manage the lettings yourself or go through an agency. Flats might be a slightly more comfortable bet given the additional layer of governance around the property.

You have been watching too much of those property tv shows lately. Please don't forget you're not pitching to real estate agents or investors, we are normal people with normal day jobs.

[mrv]

The world's reserve currency is no longer USD. It is London property. Asset prices can never go down. No more bust. Its all boom.

Life is great. Everything is beautiful. The future is bright. Pass me more of that soma.

[BrilloPad]

Don't be daft. Move to a different area where you don't need to borrow 900k for your house.

1. If you fall ill, how will you service the debt?
2. If the market changes and you can't get a contract, how will you service the debt?
3. If you get married and have a wife to pay for, how will you service the debt?
4. If you have kids, and need to put them through education for 18 years, how will you service the debt?
5. If you get divorced, and get fleeced for all your worldly possessions, how will you service the debt?
6. How will you sleep at night while you worry about the above points?

Simples! Sell up and take the huge profits! You cannot lose! Buy, buy, buy!

[Chuck]

What strategies or tactics can I employ to finance the purchase of somewhere for a million?

Don't be daft. Move to a different area where you don't need to borrow 900k for your house.

1. If you fall ill, how will you service the debt?
2. If the market changes and you can't get a contract, how will you service the debt?
3. If you get married and have a wife to pay for, how will you service the debt?
4. If you have kids, and need to put them through education for 18 years, how will you service the debt?
5. If you get divorced, and get fleeced for all your worldly possessions, how will you service the debt?
6. How will you sleep at night while you worry about the above points?

[d000hg]

Doesn't have to be a 40k house, but there are some nice properties in semi-decent areas to be had. I've seen solid flats in private developments that would make a good investment. Mortgage, if you're going that way, will be easy - BTL interest only and you could put a high deposit down, let's say on an 70k/80k property - ideally get a freehold so you don't have to deal with any service charges depending on your preference, manage the lettings yourself or go through an agency. Flats might be a slightly more comfortable bet given the additional layer of governance around the property.

Sorry I thought you meant spend £100k split over 3 properties
Definitely at around the £70k mark you start being able to buy houses in reasonably OK areas and let to working families, or even students, for probably around £500pcm.

[BrilloPad]

https://en.wikipedia.org/wiki/High_Speed_2 - there's a route diagram on that link.

Yes, it will take around a decade to build, however the head office is already built and they either have or will soon confirm that the works have begun. It's a longer game, but this is the kind of early bird investment that pays off. I think prices will start to climb once contractions announcements are made and further progress is reported after a couple of years or so.

So nothing between London and Birmingham? Will I have to live next door to AtW?

[Peter Loew]

Certainly a possibility although your tenants will likely be pretty hard work in a £40k house - typically DSS.

Doesn't have to be a 40k house, but there are some nice properties in semi-decent areas to be had. I've seen solid flats in private developments that would make a good investment. Mortgage, if you're going that way, will be easy - BTL interest only and you could put a high deposit down, let's say on an 70k/80k property - ideally get a freehold so you don't have to deal with any service charges depending on your preference, manage the lettings yourself or go through an agency. Flats might be a slightly more comfortable bet given the additional layer of governance around the property.

[Peter Loew]

The idea of HS2 was to promote growth round the country. In reality, it just sucks more of the country's lifeblood into London.

How many stations are on the HS2 link? And won't it take a decade to build?

https://en.wikipedia.org/wiki/High_Speed_2 - there's a route diagram on that link.

Yes, it will take around a decade to build, however the head office is already built and they either have or will soon confirm that the works have begun. It's a longer game, but this is the kind of early bird investment that pays off. I think prices will start to climb once contractions announcements are made and further progress is reported after a couple of years or so.

[d000hg]

Why don't you take 100k and buy 3 or 4 sub 100k properties in the north with a high yield.. get the cash flow coming in and bank on (slower than London) equity growth over the next few years

Certainly a possibility although your tenants will likely be pretty hard work in a £40k house - typically DSS.

[BrilloPad]

Buying around the HS2 link should boost growth as commutes into London will be 'doable'. Depends what your goal is too, cash flow vs equity?

The idea of HS2 was to promote growth round the country. In reality, it just sucks more of the country's lifeblood into London.

How many stations are on the HS2 link? And won't it take a decade to build?