moneystepper

Hi guys, If you are anything like me and you're trying to build up savings for your next deposit by cutting back on the non-essentials in your life, then you might find the article I posted today (all 30,000 words of it!!!) useful: 111 Ways To Save Money On Household Bills If you've got any other tips, I'd love to hear them!! Hope it helps! Graham.

That notional interest rate is currently 3.25%. I'll let other with more knowledge on mortgage lenders answer the rest of your question Ray...

Great - thanks for your response Kevin. That seems like a good idea to test it, as the company would already be highly geared before applying. I guess the question then becomes if a commercial lender would be willing to lend to a company based on a property purchase who's balance sheet was £1,000 share capital and an existing £101,500 loan (i.e. restrcitions on lending based on gearing BEFORE rather than AFTER the mortgage loan is made). I suppose it's the same question, but a much easier one to get a definitive answer for from the lenders. Also, the company management in that first year would become a little trickier as interest would have to be paid at a market rate on the directors' loan, rather than having the flexibility to pay no dividends to company owners (ie me) in the first year.

Thanks Kevin. 1. Is it not still "Buy To Let" but to a Ltd Co? I understand that the pool is smaller and that the rates may be higher as a result, but that isn't necessarily a "flaw" in the theory proposed is it? 2. Fair enough. Numbers were for illustration purposes only. Same question could apply with a £105k investment, a £100k house, a £75k mortgage and then private lenders of £25k, leaving director's equity of £5k. In my opinion, this isn't a question for an accountant (at least I hope not given that I'm an accountant), but rather is a question of lending criteria and T&Cs regarding gearing and other lending in the company after the BTL has been agreed. Does anyone have any insight on that? Thanks.

Hi guys, Theoretical question (for the time being). Say I set up a limited company as a sole director with bought up share capital of 65,000 £1 shares. This new company buys a property for £60,000. The company then obtains a 75% BTL mortgage for Ltd companies => £45,000. The house meets the valuation and income criteria and the mortgage is successfully obtained. After taking out this mortgage, are there any restrictions on the following: Cancelling 45,000 shares to pay back the director (aka me) £45,000 Obtain another loan in the business from private lendors for £15,000 and cancel another 15,000 shares to pay back to the director (i.e. are there any ongoing gearing restrictions on ltd company mortgages?) Thanks in advance for your thoughts. Graham.

He's a cynical old fool that moneystepper chap...!

Hi guys - another solid episode. Its good to get back to basics and I'm sure a large percentage of your listeners are currently accidental landlords, or at least started that way (myself included).

Second Julian's point on changing your mortgage when you move in yourself. Its a great sign that actually getting involved in property is what has fueled your desire to become a larger investor in property. Many people get involved just because of the idea, and they find that they aren't very suited to the reality. I look forward to engaging with you more in the forums in the coming months. Student property is a pretty hot topic (and hot investment) at the moment and so I've got nothing against that plan. Just be ready for inevitable pain in the neck that have student tenants will cause!!

Reading that many online blogs sure can take up a lot of your time! However, there is always great information, or at least food for thought, at them all. Very sad that I didn't make the list though Rob!! I will step up my game in the coming months!

Great summary guys. It really is guess work isn't it? I'm looking forward to the results tomorrow and the reaction in the following months. Like most (although many would try to convince you otherwise) I have no idea which way it will go and what will be the impact on the property market after.

Antony - Welcome and all the best. Your story to date is pretty darn interesting and I can only imagine that it will become more so in the coming years!!

Hi Ranjanx, I don't know the local area of Basingstoke that well from a property perspective, but generally being just south-west of London seems to be a nice place to be investing at the moment. How did you find your first experience of letting out the old property? Smooth as a whistle? What yields is this now providing?

"Using an online mortgage calculator, a £75k mortgage over 25yrs at 5%... Int only = £312.50 per month, which equals £93750 over term and I have to find the original £75k to pay back. So a grand total of £168750 repaid. Repayment = £438.44 per month, equalling £131532 over term." The maths is a little misleading. For the Interest Only, you are paying £168,750 on a £75k loan over 25 years. However, for repayment (and this is not true, but easier to understand for illustrative purposes), you have a £75k loan in Year 1, a £72k loan in Year 2, £69k loan in Year 3, etc etc. Therefore, over the 25 years, the average loan is not £75k, but rather a proportion of this amount depending on what year you are in. You therefore cannot directly compare the two figures as it isn't comparing apples with apples. For all the other advantages of interest only, see the posts already made by others above!!

Great post Rob and a very sensible and attractive approach. I particularly like the idea of the "swanning about on cruises" portfolio!

Kevin - wouldn't it be marvelous if property investing was truly this simple...