Leap of faith or road to disaster?
I’m teetering on the edge.
I have played it safe all my life and now want to do something for my son’s future. I have properties with no mortgage that I use for retirement income. Do I wait to save up the deposit for my next property which could take 3 years+ and houses will probably cost more by then, or do I take the leap, mortgage one of my existing ones now, and end up with up to 4 mortgaged properties instead while the market is slow and reduced income in the short term.
What is the sequence of events if you need to refurbish one before letting? This is what I have in mind:-
- Mortgage original house to 75%.
- Put 25% deposit on new house
- Get 75% mortgage on unrefurbished house
- Dip into the remaining money raised on the first house to refurbish it.
- Then pay to get bigger mortgage once it is refurbished.
- Then go onto next property?
Is that how it is done?
How do you all do it?
Thanks
Paula – AKA “Felix Cited” (screen name on forums)
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Member Since January 2011 - Comments: 12193 - Articles: 1395
10:30 PM, 12th November 2013, About 12 years ago
Reply to the comment left by “Felix Cited” at “12/11/2013 – 09:52“:
Hi Paula
I’m not sure I understand the context in which you are referring to having two mortgages against one property. Do you mean …..
1) Taking one mortgage and then replacing it with another mortgage or
2) Having a traditional mortgage for say 65% of value and then a second mortgage for say a further 20% of value or
3) Do you mean something else?
The bottom line is that you can’t borrow more than 85% of what a property is worth. However, it may be worth more than you paid for it if you add value or wait for house prices to rise. Therefore, it is possible to borrow more than you originally paid for a property, thus releasing every penny you invested into it and more. As an example, one of my properties cost me £19,500 in 1996. It’s now worth around £100,000 and I have a mortgage on it for £70,000. In other words, I am borrowing £50,000 more than I paid for the property. I’ve used this money to buy more properties, increase my liquidity fund and …… dare I say it …… pay for a divorce in the process.
I hope that makes a bit more sense now?
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Member Since November 2013 - Comments: 11
10:36 PM, 12th November 2013, About 12 years ago
Reply to the comment left by “Mark Alexander” at “12/11/2013 – 22:30“:
Thank you Mark. Clear as a bell now.
Member Since November 2013 - Comments: 11
11:06 PM, 12th November 2013, About 12 years ago
Reply to the comment left by “Jonathan Clarke” at “12/11/2013 – 19:16“:
Thank you Jonathan. I’ll keep in touch.
Member Since June 2013 - Comments: 582
11:54 PM, 12th November 2013, About 12 years ago
Paula – The two mortgages I was referring to was say you had an 80% BTL mortgage against a new property you were purchasing and the required deposit of 20% you needed came from released equity, in the form of a remortgage, against another investment property you had. This produces 100% funding via 2 mortgages in effect.
Member Since November 2013 - Comments: 11
8:50 AM, 13th November 2013, About 12 years ago
Reply to the comment left by “Jonathan Clarke” at “12/11/2013 – 23:54“:
Thanks Jonathan. Got it now 🙂
Member Since August 2013 - Comments: 17
10:21 AM, 13th November 2013, About 12 years ago
Reply to the comment left by “Mark Alexander” at “12/11/2013 – 22:30“:
Hi Mark.
is it possible to chat privately re divorce problems?
kind regards H
Member Since January 2011 - Comments: 12193 - Articles: 1395
3:23 PM, 13th November 2013, About 12 years ago
Reply to the comment left by “helena dolisznyj” at “13/11/2013 – 10:21“:
Hi Helena
Yes of course, I will email you my contact details.
In the meantime please see >>> https://www.property118.com/divorce-advice-for-landlords/44748/
and this >>> https://www.property118.com/professional-adviser-introduction-request/
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