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hi all

i have posted about this before, but still after a bit advice, i have 3 small comercial shops all let (£200 pcm each) a flat wihich i have up for sale at £98950 and my house thats worth about £200k, my only mortgage is on my house and is currently at £96500. i have a T that has shown an interest in renting the flat (400pcm) and i am temted to let her have it, i was wanting to sell to use as deposits for others.

i am tied in with my lender till june 08 and to get out they want £4250, to borrow from them against my property, my income probably wont cover the mortgage using the rules they apply (will find out in a day or two!) and the rate is 7.34%, £448 for 80k, int only.

so my dilema, sell and use money for others or keep and find money for deposits,

anybody got any suggestions, take the £4250 hit and remortgage my house or mortgage the flat/shops.

also any good lenders out there?



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Hi Russ

What about some sort of bridging loan until June 2008? You need to weigh up whether an outlay of £4250 (**actually - take the net of tax - afterthought - see below) is at least covered by any increase in capital/ net income (after tax!) that you will get by footing the charge.

Incidentally, make sure you are claiming some of the interest on your home against the BTL and commercial properties (up to the value of the properties when first let - I have posted on this subject a few times) - this is completely above board as you 'intoduced capital' (ie. the properties) to your letting business.

**As an afterthought.... you may have grounds to claim the redemption charge against your rental income. This is providing:

- The value of the properties when introduced to your letting business were at least the value of your current mortgage

- You will have an ongoing rental business.

You would of course need to consider your individual circumstances - I only have what you have told me to go on.

An example of how this would work:

Mr X has two BTL's with values at introduction of £100,000 each, currently worth say £150k each - no mortgage on those properties.

He also has his PPR worth say £250,000, on which there is a mortgage of £50,000

He would like to remortgage for another £125,000 to buy another property for example, taking his mortgage to £175,000 but there is a redemption charge of £5,000.

Answer: Allow - Redemption Charge would be tax-deductible against the rental busines, because a) the rental business is ongoing, and B) the total mortgage is still less than the value of the properties at introduction to the business. Of course, interest can also be claimed on the loan against the rental business.

NB - The £5k redemption charge for a 40% taxpayer would only cost him £3k - and so the 'cash value' to compare should be less.

Taking this further, assume instead that Mr X wanted to take a mortgage of £175,000, taking his total mortgage to £225,000, but it was not to buy a property... lets dream and say he wanted a Ferrari!

Answer: Pro-rate - Value of the two BTL's at introduction is £200,000 (the current value has no relevance). Remortgage means a new mortgage of £225,000.

Therefore I would pro-rate the redemption charge over the total: £5,000 x (200k/225k) = Total allowable redemption charge against rental income.

For loan interest = £Int Chg x (200k/225k) = Total allowable interest charge

I am sure that other may have some suggestions re the financing side of things however I hope the above helps you with your consideration



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Hi Russ

First thought is to rem Shops but you will almost certainly have to do this on a commercial loan - which will probaly be at a higher interest rate - although the rate you are quoting is pretty high already.

I would not consider borrowing on the terms and rates you have quoted, they're having your trousers down !

Probably a better option would be to rent the flat and put a BTL mortgage on the flat as it is the residential "part" of the building - 7.34% is way to high you should be able to get 6% or less if you look a bit harder!

Although for 80K i would be looking to raise a substantial amount, if not all of this on 0% credit cards - if you have a partner you need 4 cards each with 10k credit limit on each ( a whole lot easier to get than you might think !) then use the rent to pay these down (4800) in first year - if you have a problem rolling the cc "debt " onto more cards you can use a mortgage at any time in the future (if necessary) The point is Mortgage will cost you money 0%cc wont (if you careful and understand what you are doing!)Please see my previous post on "professional credit card tarting "!!)

So on the limited info you have provided i would neither "sell and use money for others" or "keep and find money for deposits" I would keep and rem to provide deposit money for others - This being pretty much "FREE" money as rent from T will pay for it !

You also have the added bonus that not only have you got what you wanted - you also will have no CG bill from sale of flat - you STILL have it plus 5%-10% equity growth every year !

If you sit down with a pencil and a piece of paper (and your calculator!) and work the various option through - i think you will be pleasantly amazed it the difference this 3rd option could make for you !!

Unless i have misunderstood it would appear to be bit of a "no Brainer" (No offence intended!)

Have you got another prop lined up to buy ? If not you do not need to action this plan until the day you complete on the next prop!

how much are you looking to spend on next prop as 80k as 15% deposit will let you buy 533k woth of prop - my advice -YEP go buy it ! Then do this again ............and again................and again...............

At present I "owe" or rather "have invested" £155k of cc money in prop and the interest i pay .....Yep you got it ZERO

(have"owed" this for more than 6 years now - and am eternally grateful to the cc companies for a free loan which has helped me build my portfolio!!LOLOLO)

Just love the prop game ... It is a game ...or rather a sport, like sailing.....the best sailing ...as close to the wind as you can get.(just make sure you have a life jacket!>>LOL)

Tell me your thoughts...

As i have stated on previous threads this is exactly how i , a lot of my friends and probably of lot of readers on here have built huge portfolios..

Learn the rule book then join the game...


Later .. thoughts - you do not need to "mess" with the "tied in" mortgage - if you want to borrow more money on your home property, most lenders will let you have it on a seperate agreement or loan(mortgage) which will have whatever rate +terms are applicable to the "product" you choose. (basically a 2nd mortgage with the same lender -most will NOT let it happen with a different lender - (with out making it prohibitively expensive!)

I have done this on several properties to avoid ridiculous redemption penalties - However as you point out your income will become a factor for borrowing ...........Unless you go self certified ( where it wont come in to it )

and if you want serious flexibility and a "gold star" arrangement of your overall finances get yourself an "offset" mortgage - which will give you a cheque book and credit up to around 85% of the val (185k on 200k) of your home !THis basically allows you to use you asset (home) almost like a bank acc where you can take or payback as often as you like up to the limit they set.

Do i have my home on one - YOU BET I DO !>>>>>>>!

You need to sit down with a "good independant mortgage broker" who not only Knows his products but knows the prop game as well!

I can give you the number of one of the best if you want


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Hey Simon I'd like to see this topic but I can't find it in the search facility, any ideas?

'' professional credit card tarting ''


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thanks Sherena and Simon

good advice as always!

i think paying the £4k back to the back would break my heart so thats out of the window, i think the T and a rem on the flat for now is my best option, then possibly a loan on the shops as and when/if i need it.

i dont have a prop in mind but i am looking at local flats in the nicer streets (if there are any left!), in the region of £80-90k, hoping to get around £400+ pcm, not a great profit i know but its the long game i am after.

cheers again


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hi simon,

not looking for one but buying as many as i can stretch too with the £80k, looking at 4 min. deposit, maybe a bit tidy up and up for rent, thats the plan anyway!

then maybe more in the future.

who is offering the best blt deals at the minute?


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I like the idea of credit card Tarting, but there is one big flaw, I CANT DO IT.

And there appears absolutley no reason why I can't and others can. Sainsbury's recently said, you have set up too many new mortgages recently.

I have always paid for everything on time, and checked my credit report which was fine. I am on the electoral role and moved into my own home (not rented) in January 07. Still no credit card for me, but if it is a few hundred grand mortgage I am after that is fine. Absolute madness. To make things worse ABBEY have just increased my rate to about 20% for which I have 7,000 debt on. All very annoying, 100 pounds a month down the drain. My only solution is wait half a year, not doing anything credit wise and try again. Problem is, if one turns me down, it makes my credit score worse and so on. Such an unfair system.

Simon, how do you get around this problem? I even wrote to them to explain my situation in full, they re-looked at my case and........Sorry no!

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Hi Mat

Yep - know the problem well - my credit report is 23 pages long - i have same problem as i run 4 businesses as a soletrader and my suppliers credit check "me" not my "business" also 25 or so mortgages 30 odd credit cards !

I send my app in (written, phone or net) and first response is ....NO CHANCE ...

Basically because i dont fit their "normal " profile - so i contact the underwriting team (usually by phone) and point out things like

total asset value

assets considerably outweighing liabilities

the fact that you have several mortgages suggesting that your level of financial awareness and astuteness are far higher than the average person

income is good - cc companies seem to be more "sympathetic" to people earning in excess of 26k for some reason - if you were to sell a house this year and release 30k of equity then clearly your income would go upto 56K expected income this year - you may of course change your mind at a later date and not sell it after all ! in my opinion this is "income" ....................

ASK for a vey high limit on the app as you will end up with limits of a few grand otherwise - the place to ask is in the balance tx section - you need a few "key" cards which will allow you to actually turn the money into cash by bal tx ing to your bank acc( a lot wont let you) so you need to sometimes tx from card to card to get the cash. Ask for 20K limit you almost certainly wont get it - but you might get 10 K !!

the best "key" cards are "mbna" and "egg" mbna you can apply over the phone-get an instant decision(office hours) and talk to underwriters in one call - They are the kiddies as you can have up to 5 cards with them (dont know if this is still true)

There are some cards whose "profile" and "criteria" i have never managed to meet even after full on appeals they are

abbey coop halifax paypal






morgan stanley




to get you started -these tend to be more "sympathetic" and have a coy conversation with under writers where neccesary "exactly what do i need to change in my financial arrangements for you to give me card" on one occasion i was told that i had too many inactive cc accs open (0% deals had run out and i wasn't using them) and if i reduced them from 9 to 6 then i could have the card - which i got !

May i suggest "mbna" as a starting point (Hint............!)


Ps you will find that a lot of the cards are owned by a bigger umbrella group like "mbna" and a lot will limit the no of accs you have - which when you get going and understand the system can turn from a disadvantage to a huge advantage!!!...

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GNat West recently started sending me CC Cheques so called them and told them to stop as not interested but as chatting and said was paying off CC they mentioned that could transfer any new balances in at 6.9% for life of balance, so my plan is pay off balance and then trf in another CC.

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hi simon,

not looking for one but buying as many as i can stretch too with the £80k, looking at 4 min. deposit, maybe a bit tidy up and up for rent, thats the plan anyway!

then maybe more in the future.

who is offering the best blt deals at the minute?



"best blt deals" is going to depned on your circumstances, the prop etc I am not a Mort product expert (just an x topic expert....LOL)

but i know a man who is :

He is a very good friend of mine and will be more than happy to speak to you

give him a call : Garth White 02920 257003 and tell him Simon told you to ring - he is the biz!

If he can't beat what you have got already he will tell you - very rare occurance though!


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