Cosworth or Property....?

[mboon]

Alright gents,

Just want to pick some brains.

I have enough money in my car to sell and put a deposit down on a house and if my homework pays off, rent that property out as an investiment for either a bonus on my pension or for my little girl to have when I am dead and gone.

Mr Ripply might be the best person for this as he is in the trade but I know alot of you guys have thought about it or even done it.

So my first question

Can you buy a house through the new buyer scheme and rent it out legally?

What sort of tax would be involved.. I have seen the .gov website and it looks like, no matter what way you turn, your going to get taxed to shit on it. Is there a way around this legally?

Or on another scale...


Would I be better off selling my Escort, buying one with say 70,000 miles on the clock and mostly standard, put it back to standard, make it nice and tidy and sit on it for a few years.... Only downside... I have no garage and rent one for around £240 a year.... So cannot see much of a gain if anything on this and if I sold mine for a standard car, no way would I drive it as it would be a bit boring...

I love my cars but I would really love to set my daughter up for when I am gone. I have a half decent pension going and plan to put a bit extra a side for her once a month but would like something like this if I could buy to let it and cut even or maybe make a little each month....?

Looking for your thoughts from people who have done this before as reading stuff on the net and talking to financial advisors just contradicts itself.

Thanks in advance

Mark

[iain]

If you already have an excisting mortgage you would have to take your new property on a buy to let which is a minimum of 20% deposit

[mboon]

My mrs has a mortgage under her name but my name is not on that. Would I qualifiy for a new buyer scheme in this case? and would I be able to rent that property out if I go through a new buyer scheme?

Cheers Iain

[Cossie col]

If you already have a property why can this not be for your daughter you need to put this into a trust if you want her to have it as this will avoid inheritance tax or if you need to go into a home them the robbing bastards will make you sell to fund your stay in a homepensions are shit full stop so I would stop paying into this and use the extra money to top up or help with deposit but you will need a buy to let mortgagealso another tip is to move into your buy to let at some stage and let your house out if needed but this will stop capital gains on your rented property when you sell it

[Ben Purnell]

I didn't think the New Buyer scheme was open to buy to let mortgages, as Iain has said you need a 20% deposit but I would advise to have at least a 25% deposit as it opens up better rates to you.

You also need to think about what happens when things go wrong, have you enough money behind you to pay for repairs?

As for tax any rental income received less expenses, mortgage interest will be subject to the appropriate tax being paid, depending on your income now that could be 22% or 40% or whatever the brackets are these days. Although if you do your sums I doubt it would be a great deal you will be paying.

[warrenpenalver]

How old are you?? You sound like your almost gone and want to give everything to your daughter. Noble as that is, dont you want to enjoy life yourself (albeit a bit selfishly)??

I guess it depends whats more important for you.

Dont forget the tax man will anally rape your corpse and estate when youre gone for as much money as they can get so that may not be the best way to help your daughter.

[mboon]

Cheers for the info guys.

I am 29 years old.

My Mrs has two kids from her first relationship and we have one kid together.

My Mrs is very straight so everything will be split 50/50 between the girls which would not bother me... But there dad is worth a few quid and I know they will get a good amount from him when he pops his clogs.

In my eyes, and this may sound wrong or bad.... is my daughter is getting the same as the other two but they will get a lump sum from there dad... So I either want to save some cash for her to make up for the extra the other two get or put something in her name... ie a house paid by me or even a car which will hold or esculate in price.

I do not earn massive money and this is why I am looking to do this now so in 30 years time I have a nice little pot for her to at least have a good deposit for a house or maybe more.


Ben,

I have thought about the maintanence side and I would not do it if I could not cover the property under a monthly sum for a maintanence company to cover any repair bills. This would also have to be paid in with the difference from the rent/mortage... So say I rent it out for £600 a month and the mortage is £500 a month, that gives me £100 a month to pay to a company to cover the property 24 hours a day for any issues/faults etc...

If I can set the property up like this so it is paying for itself and the maintance then I will do it.

I understand it will have times where the property is empty and I will need to foot the bills until it is filled but I can save some pennys for that.

I hope that shines a bit more light on the subject. I would like a 2 bed or even a 3 bed house if possible in a sensible location local to me...

Thanks for your help

Mark

[Mark-C]

Live your own life first mate your a long time deed

[mboon]

Yeah true but a small amount now over a long period of time will not be noticed... I hope

[Ben Purnell]

Mark,

Its a sensible idea for sure, and I've not long completed a purchase on a house to rent out, brother and I have gone into it this time as there was no way I could have afforded the 25% deposit on my own plus all the sols fees, stamp duty etc... and we've also spent around £3k each on doing it up, new kitchen etc..... Hoping from a maintenance point of view we won't have anything substantial to fork out for at least another 5 years but you just can't tell.
However my name is not on the mortgage as it was better for me to put the wifes name on the mortgage with my brother to use her personal allowance up.

Currently the in laws are renting the house until their new one is built, but we won't be getting an agent to manage the property as my experience of them in the past is they just out to grab your money, and being as the house is on the same estate we both live on, going round to do repairs is not a problem, we'll be using an agent to find and vet tenants (although we will also do this when they go to view the property as well) and to draw up the tenancy agreement and that's it.

Its also worth noting that most lenders have a minimum monthly rent you have to meet in order to secure the mortgage.
You really need to do your homework on the area you want to buy in, what mortgages are out there and the terms, have you enough money for a deposit and all the up front fees associated to buying a house and whether there will be any remedial work needed to be done before it can go on the market.

[maxest]

Who did you use for your lending ben? As i have to refinance one of mine next month..

[Ben Purnell]

We used the Cambridge building society in the end, Santander at the time offered the best rates but we had to ditch them in the end as we were 3 months down the line still waiting for an answer from them, it was almost as if they didn't want to lend any money but wouldn't give you an answer either way, just kept on asking stupid petty questions (one at a time and taking a week to get back to you), in the end cambridge came up trumps within two weeks.

[mboon]

Hi Ben, great info and just the kind of info I am looking for.

My brother is a builder by trade and has all the contacts. Between me and him there is nothing we cannot do or have someone who can do it. That is OK for the labour but again parts are a different kettle of fish.

I was tempted to mention this to my brother as he has more income than me and someone I trust.

We might even buy my parents house which was mentioned a while ago..

[Ben Purnell]

If that's the case with your brother Mark, I would just use the agent to find a tenant and do the basics and nothing else, you will get ripped off otherwise. Quite a number of years ago I had to look after my brothers house whilst it was rented and he was away. We agreed with the agent that if anything goes wrong/needs doing I would be informed and that we would make a decision on the course of action to take. Needless to say I was never informed and the amount they charged just to change a washer on a tap was ridiculous

[maxest]

We used the Cambridge building society in the end, Santander at the time offered the best rates but we had to ditch them in the end as we were 3 months down the line still waiting for an answer from them, it was almost as if they didn't want to lend any money but wouldn't give you an answer either way, just kept on asking stupid petty questions (one at a time and taking a week to get back to you), in the end cambridge came up trumps within two weeks.

Did you go through a broker or did you find them yourself,, i've spoken to a couple but they didnt seem too bothered.. one taking two weeks to get back to me and one not at all