Ok I get more specific on my situation
Current house is all paid for.
At todays rate a mortgage on the new house will be around the £800 - £850 per mth, and I should have no problems borrowing the sort of figure I need as I earn a reasonable income and have more than the golden 25% as a deposit that gets you a good rate these days.
What are you thoughts on this
There is a nationwide company (franchise) that gaurantee you rent, not an insurance scheme for defaulters, but a gaurateed payment every month from the time you sign with them, even if the house is vacant.
Sounds to good to be true, but I suppose they work it out that the fee they charge on all the properties rented in that manner will more than cover any costs where they are paying out and the property is empty or tenant defaulting.
Sound great but "What do they charge" I hear you say.
They work out the gauranteed figure as follows:
Rental value of my house £800-
Average mth mgt charge of a letting agency 10% +vat £ 96
Sum I would receive every month = £704
Yrly income £704 x 12 = £8448
£8448-
Average agt setting up fee £ 175
Yrly income = 8273
Now this is where he takes his risk, in that he allows for 1 mth of the property being empty therefore:
£8273-
£ 704
= 7568 / 12 = 630 he uses this figure as the gauranteed monthly income.
So unless I have missed something obvious it will only cost me about and extra £70 per mth (704 - 630) to get a gauranteed income.
I presume they would make very detailed checks on any prospective tenants as they are taking on the risk
They will also cover any damage, beyond wear and tear.
Now at those figures I would only have to add about £300 per moth to cover my new mortgage, taking into account tax on the rental income.
I am being naive here or is it a no brainer as my current property will serve as a great offset on the new property ?
I know interest rates can only go in one direction and it is only a mtter of time, but they cannot raise too drastically as that would completly mess things up for most of us.
Forgot to add I am wrong side of 40 but right side of 45 so have a few yrs left to work, hopefully.
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