Buy to Let mortgage advice

[fonduster]

Hi Guys, I would like to get 2 btl mortgages if possible. I will be made permanent in June and will be actively looking from June onwards. I have never had a loan yet so this will be something very new to me. I would like to purchase two houses/apartments, each costing between 120-200k. I would like to invest my deposits equally into two different properties as i know i need a 30pc deposit min in each. I already own some houses so am well aware of the costs involved in purchasing them.

Gross Income - Monthly - Yearly
PAYE - 2250 - 27000
Rental - 1000 - 12000
Rental - 1100 - 13200
Rent a room - 800 - 9600
Total -5150 - 61800

I inherited the houses about 10 years ago and own them outright.
They are worth about 300k,250,and 200k.
I know people will tell me not to put all my eggs in one basket but my intention is not to sell them at all but rather keep them for the rest of my life and gradually receive a small return on them in the future.I want to make use of a mortgage to build up my portfolio and then start looking into other opportunities.


Projected rental income from the properties will more than likely be between 900 - 1300 each depending on what i purchase.

I have started investing in a pension. My monthly contribution is 7pc of my salary.



Is this a single or joint application - Single
Type of Property - House or apartment depending on what is available and best value
Term of Mortgage. 25 years
Amount of savings and over how many years - 105k over 4/5 years, should be up to 120k in June
Is there a lump sum from any other source? no
Age of Applicants.25
Employment situation:Private sector
How long are you in current position and are you permanent. Only 3 months, will be permanent in June
Have you any children.0
Have you any court orders or Judgements: No
Have you any other loans and if so full details of amount/period/% rate and repayment amounts.
Cr. Card situation. Full disclosure. No
Have any of your existing loan or credit card monthly repayments been paid late over the past twelve months, even if you made the repayment in full a few days later? If so, how many times in the past twelve months?No
Any previous negative Cr. history by either applicant.No
Are your savings and rent clearly visible and identified as such in your bank accounts each month - Yes, I have been putting most of my money in prizebonds. I have a regular saver account where 1k has gone into it for the past 18months
Have you gone over your overdraft limit in the past six months, even if only for a day or two? If so, how many times in the past six months?No
Have you checked your ICB record to make sure it's clean?Yes, its clean.

 

[Brendan Burgess]

I know people will tell me not to put all my eggs in one basket but my intention is not to sell them at all but rather keep them for the rest of my life

You are right. I am going to tell you not to put all your eggs into one basket. You have €750k of property and around €80k cash already on a salary of €27k and aged 25. If property rises over the long term, you are going to get plenty of wealth out of these investments.

As you are proposing only 20% gearing, you are not taking exceptional risks:

But is it worth the extra risk? Only you can judge this.

The other thing to think about is the amount of work involved. You presumably have two good tenants so they don't take up a lot of time. If you have 4 properties, you will be doubling the time. But there will also be a bigger risk that you will get one bad tenant who will absorb a huge amount of your time. At aged 25, you have better things to do than be sitting at the PRTB arguing over deposits and damage to furniture, but again, only you can judge this.

Having no borrowing gives you great flexibility. If your personal circumstances change and you want to buy a bigger house. Being mortgage free means that you will be able to get a mortgage. If you already have €300k of mortgages, you probably won't be able to borrow any more.

 

[fonduster]

I know the value of property is important, but as i already mentioned, i dont intend on selling them during my lifetime and just want to earn a small profit and build my portfolio.

In the spreadsheet above, my cash is currently at 105 not 90k. By the time i look for property this should be at 120 and more than likely it will be december or later before i could even get my hands on a house so i would have another 15-20k saved bringing my cash total up to 140k. Likewise what is the 1050 and the 210k amount?

Yea your right, right now i have two very good tenants and are paying a few hundred below markets rates for that very reason. I definitely understand the risks of a bad tenants and had one not so nice person that cost me 10k.

I understand flexibility is a very useful however, in all honesty im a strong believer of saving to buy whatever you want. If i ever do want to move to a larger house in the future, i will more than likely sell the current house i live in and top it up with savings. Im only considering investing and taking a mortgage as i know i can claim the 75pc mortgage interest back as an expense and will own the asset in 25 years. For a personal residential loan, i would never really consider taking out a loan as the interest you pay on the lifetime of a loan is ridiculous. I know its good to have as many options as possible however if i dont have the money to move to a larger place, i simply wont move until i can afford it..

Using the figures i mentioned above,How much do you think i would be able to borrow?
Based on my salary alone, i should be able to borrow 95k. I hope with the extra money from two rental properties and one rent a room scheme along with being able to leverage my properties and experience in the area already, along with funding the loan with the potential rental income, i would be able to get more.

 

[Bronte]

I don't think they will allow you the rental income as 'income', they haven't since the crash as far as I know.

You know what it is like to be a landlord, you've been at it 10 years. The fact you have had a bad experience is a good thing. I say stick at what you're good at, plus you own three properties outright so unless you buy really wrongly what can go wrong ! Not only that but you have a job. And savings.

If you rent to social welfare tenants under the new scheme you'll be entitled to 100% mortgage interest relief.

You're very young. You're job is relatively low paid. Can you improve on this, go back to education maybe. Do you love it, if not you should seriously think about changing and you have the money to do so and no ties to wife or children.

Not sure what other advice you want, you can clearly do your own figures. To me a mortgage on a rental makes sense if the rent is covering most of the costs. Especially as I don't know how else to make money faster.

Good you have a pension, that's another diversification. Perhaps a financial advisor for some better advice, a full financial lobotomy, there are a few experts on here that are in the business.

 

[moneymakeover]

Why not buy one investment property (buy one at a time?)

Borrow 50k

Create a credit history

Then pay down some of the loan and borrow for another property.

Although debt is bad, the tax relief is good

Are you already putting aside 50% of income for tax?