[Finance] Buy to let mortgages

[Binney on acid]

Have been offered a product by Godiva mortgages ltd, to enable me to borrow 50% of the cost price of a flat in Shoreham. Apparently this buy to let product does not fall within the regulatory responsibility of the financial conduct authority (FCA). The loan is interest only for £160k. Fixed rate of 2.05% until 31/10/25. Monthly repayments are £276.75, set up fee is £2k. + application / offer fee of £470.
I intend to sell a flat in Brighton in 12 / 18 months time and plan to use some of the proceeds from that sale to pay off the Shoreham mortgage. There is no early termination charge. Early repayment = £125. Am I getting a good deal here?

 

[Uncle Spielberg]

PM me I can help

 

[Shropshire Seagull]

Have been offered a product by Godiva mortgages ltd, to enable me to borrow 50% of the cost price of a flat in Shoreham. Apparently this buy to let product does not fall within the regulatory responsibility of the financial conduct authority (FCA). The loan is interest only for £160k. Fixed rate of 2.05% until 31/10/25. Monthly repayments are £276.75, set up fee is £2k. + application / offer fee of £470.
I intend to sell a flat in Brighton in 12 / 18 months time and plan to use some of the proceeds from that sale to pay off the Shoreham mortgage. There is no early termination charge. Early repayment = £125. Am I getting a good deal here?

When you say "cost price", do you mean "purchase price" - aka what you have offered to buy it for?

I've not made a B2L mortgage application for a few years - sold my last one and got out of that investment trough about 12 months ago when Brexit was first supposed to have first happened.
Lending rates always used to be measured against rentable value - aligned to the surveyors estimated market rent PCM being at least 125% of your mortgage payment.
Clearly, the loan to value being 50% should make this a non-issue.
As always, seek IFA advice if unsure.

 

[Triggaaar]

Am I getting a good deal here?

It's a property you're looking to buy? If so, I'd be concerned that the price will fall substantially over the next year.

 

[The Wookiee]

Have been offered a product by Godiva mortgages ltd, to enable me to borrow 50% of the cost price of a flat in Shoreham. Apparently this buy to let product does not fall within the regulatory responsibility of the financial conduct authority (FCA). The loan is interest only for £160k. Fixed rate of 2.05% until 31/10/25. Monthly repayments are £276.75, set up fee is £2k. + application / offer fee of £470.
I intend to sell a flat in Brighton in 12 / 18 months time and plan to use some of the proceeds from that sale to pay off the Shoreham mortgage. There is no early termination charge. Early repayment = £125. Am I getting a good deal here?

[MENTION=3887]Uncle Spielberg[/MENTION] is the man to talk to

 

[B-right-on]

It's a property you're looking to buy? If so, I'd be concerned that the price will fall substantially over the next year.

Yawn. Heard this consustly for the last umpteen years. Yes prices go up and fall but never fall anywhere near they rise. If you are after a quick quid, no. But if you are after a long term investment, then definitely.

I bought my current house in 2008 just before the last credit crunch. It lost 20% of its value in a year. 12 years later its worth double what we paid for it.

 

[Triggaaar]

Yawn. Heard this consustly for the last umpteen years.

Not from me you didn't.

Yes prices go up and fall but never fall anywhere near they rise. If you are after a quick quid, no. But if you are after a long term investment, then definitely.

I bought my current house in 2008 just before the last credit crunch. It lost 20% of its value in a year. 12 years later its worth double what we paid for it.

Sure, but if you'd have known it was going to lose 20%, wouldn't you have been better off waiting a year, buying it for 20% less, and having more money?

Prices are going to fall. Consequently, most would want that reflected in any price they exchange at now.

 

[CheeseRolls]

Yawn. Heard this consustly for the last umpteen years. Yes prices go up and fall but never fall anywhere near they rise. If you are after a quick quid, no. But if you are after a long term investment, then definitely.

I bought my current house in 2008 just before the last credit crunch. It lost 20% of its value in a year. 12 years later its worth double what we paid for it.

Bit rude - not everyone can take a long term view.

In this instance a slow market, where the Brighton property doesn't sell and the Shoreham property needs to be remortgaged against a lower valuation, could be a problem. The OP is probably okay, but plenty of people have been caught out in the past on such turns in the market and highlighting the risk, can only be helpful.

 

[Herr Tubthumper]

Not from me you didn't.
Sure, but if you'd have known it was going to lose 20%, wouldn't you have been better off waiting a year, buying it for 20% less, and having more money?

Prices are going to fall. Consequently, most would want that reflected in any price they exchange at now.

I’m with [MENTION=32905]B-right-on[/MENTION] on this. I was told not to buy my first flat in 1996, the market had peaked. And I have been told this pretty much every few years since. Right or wrong, the Brits love bricks and mortar. And the south East is a desirable place. I’d say the long term risk, and given it’s a BTL I presume it is long term investment, is minimal to the OP.

 

[Springal]

Agreed. There is always something around the corner to cause a crash and it never happens.

 

[Hu_Camus]

Yawn. Heard this consustly for the last umpteen years. Yes prices go up and fall but never fall anywhere near they rise. If you are after a quick quid, no. But if you are after a long term investment, then definitely.

I bought my current house in 2008 just before the last credit crunch. It lost 20% of its value in a year. 12 years later its worth double what we paid for it.

Yep good point, but it has to be said the coronavirus close down of basically the whole of society wasn't quite so bad that year, if I remember right.

 

[MattBackHome]

I've heard that 260 - 600 million people a year are getting BTL mortgages.

 

[Mellor 3 Ward 4]

Agreed. There is always something around the corner to cause a crash and it never happens.

Not quite true, certainly the 'never' part of the above.

Substantial price drops in 89-93 and 2008-10 meaning huge negative equity for many.

Of course interest rates are very different now to the early 90s

With regards to the OP, it really depends on how long they're in this for.

But why anyone would buy right now, rather than in a years time is beyond me.

 

[Shuggie]

"Uncle Spielberg has exceeded their stored private messages quota and cannot accept further messages until they clear some space."

Despite the doom-mongering, US is being inundated (or his admin is a bit shit).

 

[Uncle Spielberg]

I've heard that 260 - 600 million people a year are getting BTL mortgages.

very good

 

[Uncle Spielberg]

"Uncle Spielberg has exceeded their stored private messages quota and cannot accept further messages until they clear some space."

Despite the doom-mongering, US is being inundated (or his admin is a bit shit).

thanks, cleared

 

[Uncle Spielberg]

1.04% tracker until 31/5/22, £ 1999 fee added, £ 405 survey fee - £ 160k = £ 140.40 pm, pm for more details

 

[Arthritic Toe]

I’m with [MENTION=32905]B-right-on[/MENTION] on this. I was told not to buy my first flat in 1996, the market had peaked. And I have been told this pretty much every few years since. Right or wrong, the Brits love bricks and mortar. And the south East is a desirable place. I’d say the long term risk, and given it’s a BTL I presume it is long term investment, is minimal to the OP.

1996 was the absolute depth of the trough, not the peak. Negative equity was everywhere.

 

[Herr Tubthumper]

1996 was the absolute depth of the trough, not the peak. Negative equity was everywhere.

Maybe I bought it another year then. I was definitely told by people the market had peaked though.

 

[Live by the sea]

It's a property you're looking to buy? If so, I'd be concerned that the price will fall substantially over the next year.

Very unlikely prices will fall. Corona will massively slow down the market for the next few months , then once the worst is over, property prices will remain stable .

Obviously as always try to buy in the most in demand areas of our city not the surburbs and most of the demand is to live in central locations near the seafront and all the shopping , restaurants etc .