Mortgage question

inferno · 22 Apr 2008 at 19:24

This is all just thinking ahead, nowhere near getting a mortgage, but no harm in thinking about it.

Hopefully I will get a job in the middle east in a few years where the company pay for you housing. I was thinking that if I lived abroad and didn't pay for a house, I could get a mortgage in England and rent it out, covering the mortgage. Assuming I could then pay the deposit for another mortgage would I be able to get another property and get someone to pay for it via rent?

It all sounds too easy? There must be a catch? Is a bank going to allow you to borrow all this money, when the only way you can pay for it is via renting it out?

Obviously nowadays the banks are wary, but in a few years I guess it would have calmed down.

Many thanks!

Mr^B · 22 Apr 2008 at 19:27

Buy-to-let mortgages tend to be more expensive, and the house needs to be in good repair, and the rent rates have to be reasonable.

Bear in mind the additional costs of being a landlord (repairs, etc...) and possible problems with finding tenants, tenants trashing the place, etc.

ste_bla · 22 Apr 2008 at 19:57

Why not put money into a savings account in the uk and then you should get most of the tax back seeing you will earn nothing within the UK. So ~5% a year do you really think the housing market can keep on at that rate? Plus you don't have issues with insurance/boilers/liabilities etc!

Morba · 22 Apr 2008 at 20:20

buy to let is based on hitting something like 8% per year isnt it? not really enough to put away for another place when you take into account insurance and all manner of other things to pay for in a house.

aardvark · 22 Apr 2008 at 21:13

the bank won't let you, and the rent will not cover the mortgage with house prices this high and mortgage interest rates going up.

Ev0 · 23 Apr 2008 at 18:44

aardvark said:
the bank won't let you, and the rent will not cover the mortgage with house prices this high and mortgage interest rates going up.

Slightly sweeping comment there, depends on how much you can put down. You need a pretty hefty deposit to do this though.

And I know for a fact that our mortgage is less than the rental value of our house as a friend owns the house next door and rents it out

schnipps · 23 Apr 2008 at 19:04

You pay tax on rent earnings yes? Or am I mistaken?

Andrew_McP · 23 Apr 2008 at 21:21

schnipps said:
You pay tax on rent earnings yes? Or am I mistaken?

One of the reasons the BTL craze got out of hand is that, unlike normal housebuyers, you can deduct mortgage interest payments from your tax liability.

While this was intended to save the government money (more landlords, no need to build council houses) it did so by messing up the housing market for everyone else. It was another shameful, short-sighted policy IMO.

Andrew McP

mattx2 · 23 Apr 2008 at 22:12

inferno said:
It all sounds too easy? There must be a catch? Is a bank going to allow you to borrow all this money, when the only way you can pay for it is via renting it out?

Obviously nowadays the banks are wary, but in a few years I guess it would have calmed down.

Many thanks!

cathes are
1. you probably need around a 20% deposit or expect a very high rate
2. the rate will be around 50-100bps higher than a similar residential mortgage
3. higher arrangement fees too