9:56 AM, 13th October 2014, About 8 years ago 1
We own our home in South East London with no debt and are fortunate to own a property in Portugal that we rent out over the summer to supplement our pension.
In 2013 we bought a buy to let flat with a 60% mortgage and following lots of great advice from Property 118 and the NLA we have enjoyed a decent income and some capital gain. We purchased the flat to set up a pension up for my wife to A) utilise her tax allowances and B) If I get hit by a bus she only gets 50% of my occupational pension .
We did a light refurbishment on the flat and enjoyed doing the work and I have enjoyed the continued learning about being a landlord.
We have been lucky and not had any serious problems.
Following Mark’s advice we are banking all the rent at the moment to build up a 20% contingency fund, albeit we could provide this from savings if it was required now.
The question I would like to post is whether it is sensible or a step too far to raise equity from our home to fund the deposit another buy to let flat?
What are the additional risks we would be taking on?
Buying a flat in the same area only seems to work on income if we get a 2 year fixed rate, once we get to 5% or 6% interest rates the rent doesn’t cover the costs.
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