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thinking about BTL


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Hi everyone im new here so big hello to you all! as the title says im thinking about getting in to the btl im a tradesman myself with my own business so any work needing doing on properties would not be a problem at all! but my question is more about the figure side of things as im not great when it comes to this. basically i have savings for a deposit on a property and this is more about a pension for myself as im only 27 and going in to properties is my way of a pension so not looking at making money short term at all. What i want to know is how do you make any form of money through btl mortgages as there intrest only, im confused on how you make money out of letting as if no capital is being paid off then where do you find the money to pay for a property out right when the mortgage is finshed? im sure this is a stupid question but im new to all this and just unsure really.Im realistic and not trying to make a quick buck out of this, its for my future. Any feed back and advice would be great.

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Hi Jimmer,

Actually your questions are good ones and 27 is a good age to start.

Firstly not all BTL mortgages are' interest onl'y. At present you may find that a condition for the 1st year but then usually you can change to a' repayment' mortgage which does reduce the capital borrowed over the term. I always use this one and find Nat ~West very amenable to me. Some on this site might disagree.

In' interest only' the repayments are less and you will need to re-finance later but the landlord is expecting the property to rise in value over time (not at the moment unfortunately). The landlord would then expect to re-mortgage that property to buy another. Trouble with this is that currently lenders are only lending 70% LTV (loan to value) which means that they will only lend 70% of their decided value and you have to stump up the rest in cash and pay fees. In the past LTV was much higher and that is what has got a lot of people in a big mess.

Your great strength is that you could take a wreck and make it worth more by your skills and so increase value quickly. You then could sell or rent out. Some residential property is relatively cheap right now so it is a good time to buy - especially a wreck. Check out 'Homes under the Hammer' 10am on BBC1 for the formula.

Being a landlord is not always so easy as you will see in the preceeding questions on this site but if you have a deposit saved then think about having a go.


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A sensible option for your first buy to let property may be to get an interest only mortgage, but with an option to making capital repayments each month if you feel you can afford it (most buy to let lenders offer this). This will mean that your monthly mortgage costs are kept as low as possible (because you will only have to pay the interest each month) allowing you the freedom to use more of the rent you collect for other purposes associated with your property.

There are a lot of unexpected costs when you first get into buy to let, and by keeping your monthly outgoings from the rent as low as possible you’ll be in a stronger position to deal with these unexpected costs.

Once you begin to ‘find your feet’ in the buy to let business you will then be able start to make capital repayments as and when you feel you can afford it.

Good luck

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