Tiny  Portfolio – Any advice for accidental landlord

Tiny Portfolio – Any advice for accidental landlord

9:39 AM, 7th November 2016, About 5 years ago 14

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I am a landlord by default. My mother had a stroke in 2011 and needed full time care so I quit my job and moved from Northumberland back to Norfolk with my husband. We let out our house as had no time to sell it.Tiny dog

Five years on, as we both have no decent pension to come to us, our tenants have been in situ for the entire time, with absolutely no problems, so we purchased another small flat in January 2016 in Norwich where we now live which has a long term tenant on a yearly shorthold tenancy agreement. I am still caring for my mother so have no income whatsoever apart from the two rental incomes – which total £11,640 a year gross. We have a mortgage of £65,000 interest only and the two properties are worth approx £220,000 in total.

I also have inherited a house from my father which I jointly own with my brother which is where me and my husband currently live, my brother is not pushing us to sell and this has no mortgage. It is worth approx £500,000.

My husband is a CCTV engineer so earns a decent, but not high salary. This year, I filled in my own tax return as I was still under the tax threshold, but next year, I will be slightly above.

I am wondering what the best way forward is to keep all things legal and avoid making schoolgirl errors! Any advice/thoughts as how to improve my income would be appreciated!

Emily



Comments

by John Constant

9:24 AM, 12th November 2016, About 5 years ago

Reply to the comment left by "Emily Callaghan" at "07/11/2016 - 13:39":

Emily,
if I have read this correctly, you are living in an inherited property that you jointly own with your brother. You state in your post that you are considering taking a residential mortgage on your current property and using it to pay off the BTL property and your personal income comes from the property rental.

To do this would require the cooperation of your brother, as he would need to be a party to the mortgage too. The position is complicated by the fact that your brother doesn't live there (I assume). Many lenders would have a problem with this although there are one or two who would allow someone to be on the mortgage, but not live in the property.

I don't know what your brother does for a living, nor what income he has, but any mortgage that you and he were to obtain would need to be affordable in accordance with the lenders calculations. Your husband's income would not be taken into account, as he wouldn't be a party to the mortgage. He could of course become a party to the mortgage, but you and your brother will be surrendering equity to do so.

You could of course consider reviewing any mortgages that you have on your BTL property to see that you are getting the very cheapest deal for your circumstances. This should be done as soon as possible as lenders stress test will be changing as of 1st January 2017, meaning it is going to become harder to obtain the best deals.

Please feel free to contact me to see if you are getting the best value for money. We (HD Consultants) have been assisting Property118 members for a number of years now. There will be no obligation on your part.

by Emily Callaghan

6:53 AM, 15th November 2016, About 5 years ago

Reply to the comment left by "John Constant" at "12/11/2016 - 09:24":

Hi John,

thanks for your comments, yes , my brother lives in Kent. He has a mortgage on a house there so probably cannot take on another, is comfortably off , hence not hassling me to move out and hand over his half of the house. The mortgage we have at present is with Nat West, it came with no fees and is about 3.5% interest only. We can of course overpay as it is only £166 a month. I was just thinking that the rates are so low for owner occupier at the moment, a residential one might be better? As it is only for £65000 I don't think it worth getting one with fees. I am happy to add my husband to the property if necessary - if he divorces me, he is entitled to half what is mine anyway I guess (I am hoping that this will not happen, we have been together for 21 years). Any advice is greatly appreciated.

by Michael Barnes

20:20 PM, 15th November 2016, About 5 years ago

Reply to the comment left by "Richard U" at "07/11/2016 - 16:33":

That is not correct.

It is the purpose of the loan that qualifiers it as deductible in calculating profits (nearly fell into the government-propaganda there of saying "qualifies for tax relief"), not what it is secured against.

As the new loan is to pay off a more-expensive loan to purchase the buy-to-let, it is a deductible expense. Also any arrangement fees are deductible.

But remember, only the interest is deductible, not any capital repayments made.

by John Constant

17:31 PM, 18th November 2016, About 5 years ago

Reply to the comment left by "Emily Callaghan" at "15/11/2016 - 06:53":

Emily, perhaps you could click my "Read about me on my Member Profile" button and contact me via that page. I would be happy to see if we could make worthwhile savings for you. Kind regards John


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