Interest rates

[Joe Daque]

Do you guys think there will be any more interest rate rises in the next year?

I have mortgages on two properties and the heat is starting to get to me.

Should I try and sell up?

[Reg]

According to many pundits, interest rates could well continue to go up in the new year, with February being the favourite, should there be is a rise again.

The bank of England have recently raised rates (August) then given it three months to filter to the economy until the last rise in November. That's why Feb is fairly likely.

I don't think they will raise rates 2moro when the BoE meet again, but the BoE are fighting inflation (which is higher than it should be.

If you're struggling, I think you could do worse than sell up, it's abit hairy at the moment.

[Melboy]

My opinion, for what it is worth Joe is,......... Yes

I reckon around February or March.

The Financial Pundits seem to think along these lines as well.

Debt is out of control at the moment and the BoE are going to force the issue to bring borrowing down.

[Melboy]

Well IR's stayed the same today so no great surprise there then just before Christmas.

I don't think the BoE would dare to raise them so soon.

The Financial papers are still talking about February or March though.

[Reg]

Yes, no great surprise keeping interest rates on hold today.

According to the pundits it's 50/50 as to whether or not they will raise rates again in Feb.

Personally, I think they should raise rates a few more times to keep personal credit under control.

Joe obviously won't agree, sorry mate.

I've also read a few articles recently, apparantly 50% of all repossessions are now buy-to-let (especially new builds - which are particularly vunerable, due to the high purchase prices the developers charge and most of these apartments are beyond first time buyers, therefore too many buy-to-letters in the block, not enough tenants).

More buy-to-letters are ganna have their fingers burnt then ever b4, fasten your seat belts everybody

[Trenners]

Hi Joe,

Yes - interest rates almost certainly on the rise .... but am I bothered - is my face bothered ...... of course not .... because I've got fixed rate mortgages for the next 3 - 5 years ........

As long as I keep letting the properties .. .and as long as house price rise .... I'm "quids in" ..... even if house prices fall ... I'm not bothered ... because I wasn't selling anyway !!

Buy buy buy ..... but fix fix fix (the rate)

Good luck,

Mark

[Joe Daque]

My fixed rate mortgage ran out two months ago (fixed for two years), it was abit of a shock when I saw how much the new payments were, wish I had fixed them for 5 years now! I can't afford to re-mortgage as money is tight.

I'm hanging in there, I don't really want to sell, but if something major happens (maintenance, tenant decides to stop payment etc), then it will be game over for me.

Thanks for the advice guys

[Melboy]

Depending on your location don't hang around if you have to sell to clear debts etc.

I know a BTL who has just managed to sell an Apartment in Swindon who was in an identical position to yourself and had no Tenants for 3 Months and his Mortgage reverted to normal rates. He was lucky to get out quickly with absolute minimal loss of money.

[Joe Daque]

The two properties are Welling, in south-east london.

I might contact an estate agent at the weekend. If I decide to sell, I'm going to put them up for a realistic price for a quick sale. If I sell up, I'd sort of feel like a failure, 'cause it was suppose to be a long term plan

[Matthew]

This is why I only go for high yield returns. I always make sure that the rent will at least cover the interest payments if the interest rates doubled.

In reality, I could just about scrape by if they trebled, but I can't see them rising to 15% any time soon.

I guess your properties are high risk 1 bed flats?

[Joe Daque]

One's a two bed terrace, the other is a one bed flat above a shop.

I was quite stubborn (against the advice of my financial advisor) by having repayment mortgages on both, that's why I'm struggling, I just didn't like the idea of gambling on house prices with an interest only mortgage, but now I wish I had done, if I do sell up, at least I'll be up (even after all the charges)

[Melboy]

The two properties are Welling, in south-east london.

I might contact an estate agent at the weekend. If I decide to sell, I'm going to put them up for a realistic price for a quick sale. If I sell up, I'd sort of feel like a failure, 'cause it was suppose to be a long term plan

Aaaaah! I know Welling very well as it happens even though I live in Wiltshire. My Mother in Law and Brother in law live in Welling. Not that that is going to help you at all.

If and I say if, you are having money problems then the secret is to get out without hopefully losing too much money and hopefully nothing at all. Make the decision and stick to it.

Perhaps try and sell just one of the houses..... privately if possible...... to save on agents fee's. Plenty of free property websites around to have a go at.

Nothing worse than financial pressures to keep you awake at night!

www.houseladder.co.uk................ is but one of them.

Good Luck!

Mel.

[Pauly]

Sorry to hear that you're struggling - a casualty (one of hundreds) who are in danger of falling off the back of the buy-to-let bandwagon. Maybe you should just sell one of the properties, possible the two bed terrace, it's probably appreciated more in capital growth than the flat, and the flat will probably give you a better yield.

By the way, what type of tenants do you attract to the flat above the shop, low life?

[Joe Daque]

Funny you should mention that, yes, the majority of the tenants have been either dss spongers or kosivans that can barely speak the lingo

[Pauly]

Yes, stick to dss, a friend of mine says that kosivans live barely better than wild animals, almost sub human, his words not mine

[Reg]

Perhaps this topic is heading in the wrong direction, and the language recently used has been inappropriate, it's abit unfair to cast such a damning trait on an entire nation

[Matthew]

You should be able to revert to interest only without any charge if you are no loner tied in.

It also shouldn't cost anything to remortgage, especially as many pay for valuation etc, have a word with a good IFA and they will sort you out.

But if you are on the standard rate I guess you're paying a few % over the odds.

I always let my properties out on seperate tenant basis, i.e. let out a four bed, 2 recep house as 5 seperate rooms. You get a lot more money that way and it really doesn't end up giving you that much more work.

The way I see it if I get one problem tenant not paying, I'm still making the same as I would from the other four letting it out as a whole. You tend to have less voids this way too, there are a lot of people wanting just one room as they make huge economies of scale savings on council tax/internet/sky etc.

If the 2 bed becomes vacant, it may be worth trying to rent out as 3 seperate rooms. I put one add on Spareroom.co.uk and got 20 viewings in one weekend for my reading property. Worth considering anyhow, though not sure what the Welling rental market is like.

[Joe Daque]

If the 2 bed becomes vacant, it may be worth trying to rent out as 3 seperate rooms. I put one add on Spareroom.co.uk and got 20 viewings in one weekend for my reading property. Worth considering anyhow, though not sure what the Welling rental market is like.

That's interesting, I had considered letting out rooms individually, but how would it work legally ie Do you have to get everyone to sign the tenancy agreement, then what if one person left, would you have to get everyone to sign a new one?

Or is th only, cash in hand, no questions asked?

Also how could a let three rooms when it's a two bed house?

[Matthew]

I was assuming that it had two receptions? Also some properties have large kitchen diners so a lounge isn't needed.

You could also consider letting one room to a couple as you can ask for more, I tend to ask for £300 to £350 per room, but couples expect to pay around £500. So you could let out the two bed place to 2 couples for £1000 if there isn't two receptions. I'm only hypothosising (can't spell that :-)), but there are ways of making more money if you need to.

You have seperate tenancy agreements with each tenant. When somebody leaves, it doesn't affect the others. You can get these tenancy agreements off the internet.

My advise is advertise via internet sites and also the local rag, you will generate a lot more interest than letting agents and thus be able to pick the people you want to let the room to.

There are a lot of single people these days, and not many know someone to live with, with one bed flats being costly, there is high demand for seperate rooms.

For each person you think is decent, get them to give you £20 for checking their credentials and send them a form from Rentchecks.com. When they have filled it in, submit it online for an advanced report (which costs you £20) and within about 2 to 3 days they will tell you whether to accept or not.

They check their job is valid,chase previous tenants, speak to character references and look at last 6 years credit report. Only accept those with a low score.