kwakudtraveller:
I have a couple of questions. Please help a brother 🙏🏿

1. If I'm buying a house in an onward chain, and all contracts are signed. My question is: When do mortgage payments start? Is it right away, or when I move in? This is especially confusing especially if the current owners haven't found a new home yet.In this case, who pays the mortgage if they're still living there after the sale closes?

2. For those who recently bought a home within the £300k mark, what is your monthly mortgage payment? I understand interest rates vary by lender, but I'm curious about actual figures people are paying, not estimates on Zoopla (which I've heard can be inaccurate).

PS they can't complete and live there. It must be sold with vacant possession - I am assuming it is a residential purchase. So if they do not leave at completion, it becomes a whole legal issue.

On that note - it is illegal to buy a house and then rent it to tje previous owners so be wary of them saying let's stay and pay you for a month etc. A solicitor who is on the ball will point out these pitfalls.

Have you exchanged? And they haven't found a place to move to yet?

Ticha:

From completion date. Once monies have fully exchanges hands, you become liable for the mortgage. Most lenders have set dates that the mortgage goes out so your first payment will be higher than usual. Then it was settle into the monthly payments.

For example, we moved in 22nd June, Santander takes payment on the 1st of the month so our June payment has been pro rated and added to July payment. Our first payment date is 1 Aug.

Make sure your home insurance is also set up correctly. Santander, Natwest and Nationwide (where we have mortgages) expect your insurance in place from completion date. We once had a mortgage with Accord who expected us to have insurance from the exchange date.

Thank you very much for the detailed response. Really insightful. I’ll be sure to factor in the insurance.

Ticha:


PS they can't complete and live there. It must be sold with vacant possession - I am assuming it is a residential purchase. So if they do not leave at completion, it becomes a whole legal issue.

On that note - it is illegal to buy a house and then rent it to tje previous owners so be wary of them saying let's stay and pay you for a month etc. A solicitor who is on the ball will point out these pitfalls.

Have you exchanged? And they haven't found a place to move to yet?

Yes, it's a residential purchase, and the seller hasn't yet found a new place to move to. To be fair, It's also possible they found one but aren't disclosing it and I just submitted an offer. I'm noticing a trend, all the houses I'm interested in seem to have onward chains which is my worry.

kwakudtraveller:

Yes, it's a residential purchase, and the seller hasn't yet found a new place to move to. To be fair, It's also possible they found one but aren't disclosing it and I just submitted an offer. I'm noticing a trend, all the houses I'm interested in seem to have onward chains which is my worry.

Ah if your offer has just gone in, them don't worry. It's normal in a lot of ways for people to sell first before they start looking for their next purchase. Majority of sales here have a chain. In part, I think it's why the sales process takes such a long time! It's not uncommon to see a chain of 4/5/6 buyers and sellers.
It's worth letting them know that you won't wait indefinitely though especially as your mortgage offer will probably expire after 6 months. The one time we bought in a chain, we have them one month to find a place or we'll move on and thatwe won't start any process till they have found, offered and been accepted for their own onwarc purchase. So my advice will be don't instruct solicitors or a survey till the chain is complete so you know they're serious about moving.
You'll be amazed the number of sellers that test the market all the time and have no serious desire to sell.

Goodenoch:


Madam Ticha, thanks for this evergreen insights.

Please, based on your experience doing airbnb and also longer term rentals of part of a home, which would you say you had a better experience with and which would you do now? Also, any issues you'd be more wary of - especially the long term rentals since you've covered airbnb pitfalls here.

Looking at converting a garage/extension into a separate self-contained studio flat so trying to figure out which route may be best.

Thanks!

I will not return to doing stand-alone Airbnbs. The income is too volatile for my liking. As part of the house I live in, I will consider and prefer short term lets as long I do not depend on the income to pay my bills.

A few things to consider for long term lets in an annexe -

With an annex, the council will band it as a separate property for council tax purposes from the main house especially if it has cooking facilities. Some will band it if it has a separate loo/bathroom. Once it’s banded, it can be a massive pain to get them to remove the banding. They’re broke and are not smiling!

Studios tend to have a high turnover rate for long term lettings. The rent is not too different from a 1 bed which has more space and same bills or from a room in a shared house which is cheaper as bills are shared and potentially all inclusive. People will often use them as stepping stones. If you’re near a university/hospital, it maybe worth liaising directly with the accommodation offices as a stop gap accommodation provider. My advice will be to make it at least a one bed annex.

Your mortgage provider might not be too happy about it because you’re changing their security from what was agreed. Obviously, you’re ‘supposed’ to notify them of any material changes to the house. They can stop you from doing the extension or ask you to change the kind of mortgage you have if you say I want to extend to rent out so thread carefully.

Consider your tenant profile. Single occupant? What if the single occupant has someone visiting daily? Happy to take a couple? What if they have a baby?

Minimum ASTs are 6 month long. What happens if you get a not so good tenant? You’ll be stuck with them in your adjacent space for a min of 6 months (will change if the rental reform plans go ahead).

Then there is tax. Rent a room only applies to lodgers or short term lets that share your space with you. Anything else will count as income for tax purposes. Due to S24, you cannot offset your mortgage interest, so all rent counts as income minus expenses. If the studio is all inclusive, then you will need to ensure that your calculation of the share of expenses is proportionate. Depending on your current incomes, the rental income might put you and madam straight into a higher tax bracket.

The cost of the conversion will not be classed as an expense for tax purposes – it will be a capital expenditure against future CGT. If the council re-bands you, when you sell, you will also be liable for CGT for the value of the annex as it would not be classed as your primary residence (just the annex value portion). So, you will pay tax on that portion of the uplift when you sell which is currently set at 28% for each of you so the longer you will there, the more tax you will pay as the house appreciates in value.

It doesn’t mean it’s not worth it. Just some things to consider as you plan especially around taxes and how that will impact you both as you earn more.

Ticha:


I will not return to doing stand-alone Airbnbs. The income is too volatile for my liking. As part of the house I live in, I will consider and prefer short term lets as long I do not depend on the income to pay my bills.

A few things to consider for long term lets in an annexe -

With an annex, the council will band it as a separate property for council tax purposes from the main house especially if it has cooking facilities. Some will band it if it has a separate loo/bathroom. Once it’s banded, it can be a massive pain to get them to remove the banding. They’re broke and are not smiling!

Studios tend to have a high turnover rate for long term lettings. The rent is not too different from a 1 bed which has more space and same bills or from a room in a shared house which is cheaper as bills are shared and potentially all inclusive. People will often use them as stepping stones. If you’re near a university/hospital, it maybe worth liaising directly with the accommodation offices as a stop gap accommodation provider. My advice will be to make it at least a one bed annex.

Your mortgage provider might not be too happy about it because you’re changing their security from what was agreed. Obviously, you’re ‘supposed’ to notify them of any material changes to the house. They can stop you from doing the extension or ask you to change the kind of mortgage you have if you say I want to extend to rent out so thread carefully.

Consider your tenant profile. Single occupant? What if the single occupant has someone visiting daily? Happy to take a couple? What if they have a baby?

Minimum ASTs are 6 month long. What happens if you get a not so good tenant? You’ll be stuck with them in your adjacent space for a min of 6 months (will change if the rental reform plans go ahead).

Then there is tax. Rent a room only applies to lodgers or short term lets that share your space with you. Anything else will count as income for tax purposes. Due to S24, you cannot offset your mortgage interest, so all rent counts as income minus expenses. If the studio is all inclusive, then you will need to ensure that your calculation of the share of expenses is proportionate. Depending on your current incomes, the rental income might put you and madam straight into a higher tax bracket.

The cost of the conversion will not be classed as an expense for tax purposes – it will be a capital expenditure against future CGT. If the council re-bands you, when you sell, you will also be liable for CGT for the value of the annex as it would not be classed as your primary residence (just the annex value portion). So, you will pay tax on that portion of the uplift when you sell which is currently set at 28% for each of you so the longer you will there, the more tax you will pay as the house appreciates in value.

It doesn’t mean it’s not worth it. Just some things to consider as you plan especially around taxes and how that will impact you both as you earn more.

Thanks so much!

it's not to rely on for bills or anything but just to get some additional funds to overpay as and when, so I think short-lets will be the best, and it'll probably be easier to do some minor work in the annex to make it work for short-lets without needing to do the major works (and resulting planning issues) that we'd need for long term lets.

Thanks again. Much much appreciated.

kwakudtraveller:
I have a couple of questions. Please help a brother 🙏🏿

1. If I'm buying a house in an onward chain, and all contracts are signed. My question is: When do mortgage payments start? Is it right away, or when I move in? This is especially confusing especially if the current owners haven't found a new home yet.In this case, who pays the mortgage if they're still living there after the sale closes?

2. For those who recently bought a home within the £300k mark, what is your monthly mortgage payment? I understand interest rates vary by lender, but I'm curious about actual figures people are paying, not estimates on Zoopla (which I've heard can be inaccurate).

And for number 2, it depends on the deposit, interest rate and the tenure! For the tenure (or tenor), it depends mostly on your age. You can assume a retirement age of about 70 years or less. This means that if you're 40, your max tenure is 30 years.

The easiest way to get exact figures is to use a free Mortgage calculator like https://www.mortgagecalculator.uk/

As seen below, a 300k property for 30 year mortgage at 5.29% is about £1500. £300 goes to repayment of the house and the rest is interest

Solumtoya:


And for number 2, it depends on the deposit, interest rate and the tenure! For the tenure (or tenor), it depends mostly on your age. You can assume a retirement age of about 70 years or less. This means that if you're 40, your max tenure is 30 years.

The easiest way to get exact figures is to use a free Mortgage calculator like https://www.mortgagecalculator.uk/

As seen below, a 300k property for 30 year mortgage at 5.29% is about £1500. £300 goes to repayment of the house and the rest is interest

Thanks, @Solumtoya. Can’t believe I forgot about tenure in own response. Sorry @kwakuthetraveller - the figures I gave were for 25 years.

Solumtoya:


And for number 2, it depends on the deposit, interest rate and the tenure! For the tenure (or tenor), it depends mostly on your age. You can assume a retirement age of about 70 years or less. This means that if you're 40, your max tenure is 30 years.

The easiest way to get exact figures is to use a free Mortgage calculator like https://www.mortgagecalculator.uk/

As seen below, a 300k property for 30 year mortgage at 5.29% is about £1500. £300 goes to repayment of the house and the rest is interest

Thanks bro

We're at a stage where we need professionals to guide us.

We started with a structural engineer. I called a few and got quotes that ranged from £600+vat to £800+vat. I finally went with one attached to an architectural firm because we will need architects soon. His fees was £650+vat.

I managed to negotiate his rate down by asking if we definitely needed a report - he said no. As long as we can follow him and take down notes, he will clarify anything before he leaves so we paid £280 all in.

He spent 2 hours and went over every inch of the house. The foundations to the front left and side are shallow and that can either be rebuilt or underpinned if we want. We now know which walls are definitely load bearing walls, which ones we can potentially move for the most gain. We have a floating brick wall in one of the bedrooms! Scary! Luckily, we'd always planned to remove that wall anyway. I know a lot more about joists and how they work than I ever did before!

I have read a lot of survey reports and this is the first time, a lot of words and sentences make sense . I basically recorded him talking as we went - asking lots of questions of course. Then transcribed and saved it for when we need it in the nearest future.

In the mean time, we have been tackling the garden! I forgot to take full before pictures but as it's not finished, you can see how far we've come! I am impressed because I absolutely hate gardening but I love saving money more! This one involved everyone. We still have the hedges and some of the trees to trim and hopefully, we'll be sorted before autumn comes!

Back garden all done!

Better picture of the work done in front - the garden in front is bigger.

We have also been removing the ivy on the house as it absolutely destroys mortar and thus walls plus whenever I open the windows, it's insects and bugs galore. I didn't even know the UK has millipedes till I saw one in the dining room!

We've removed most of the back wall ivy - the previous owners actually deliberately grew them on the wall because there are pins holding and guiding the branches in place.

We still have the side walls and front wall ivy to remove 😪😓

Hello people, must I use the mortgage advisor recommended by a builder?

babajeje123:
Hello people, must I use the mortgage advisor recommended by a builder?

No although they might try to make you. It's always good to let them give you a quote though - as long as it's free. That way you have a few to compare.
Just tell them you've sorted your mortgage - no give any long explanations

Ticha:


No although they might try to make you. It's always good to let them give you a quote though - as long as it's free. That way you have a few to compare.
Just tell them you've sorted your mortgage - no give any long explanations

Thanks Ticha

Ticha:
Better picture of the work done in front - the garden in front is bigger.

Nice work with a good plot and large windows.

Remind me if you're the person who went to Australia but had and put their house on AirBnB.
I remember same person stating consent to let can be extended. Looking to know what lender offers that and how practical is it to remortgage a property with a different lender if one is no more tax resident in the UK

jedisco:


Nice work with a good plot and large windows.

Remind me if you're the person who went to Australia but had and put their house on AirBnB.
I remember same person stating consent to let can be extended. Looking to know what lender offers that and how practical is it to remortgage a property with a different lender if one is no more tax resident in the UK

We moved to NZ and put our home on Airbnb for a year them rented it out and yes, it's been on CTL since then (over 5 years now) plus we've remortgaged twice too.
If you try to move to a new lender, you'll be forced to change to a BTL mortgage including having to top it up if your LTV is not low enough.

Ticha:


We moved to NZ and put our home on Airbnb for a year them rented it out and yes, it's been on CTL since then (over 5 years now) plus we've remortgaged twice too.
If you try to move to a new lender, you'll be forced to change to a BTL mortgage including having to top it up if your LTV is not low enough.

Great. With this your current proje, have you moved back?

On remortgage you were not asked to provide new income documents?
Also, what lender are you using?

If moving to a different lender, would the rates offered to expats be any different from those living locally and how accessible are such products?
I'm on circa 70% LTV now and looking to push to 60- 65% if possible. My plan is to take out a 5yr fix (10 if possible) before leaving so the whole stuff could just be on autopilot.

jedisco:


Great.

Yeah we've moved back to the UK for now.

We're with Natwest for that loan. A remortgage with the same lender is just a push of a button in the app or confirmation via letter. For one remortgage we opted to have the house revalued and paid for that. All through the app.

Yeah expat mortgages usually are at a higher interest rate. There are only a handful of lenders that will lend to expats and all are through brokers. Even Natwest International HSBC. You will incur higher rates, broker fees and it seems also the lenders legal fees. It gets very expensive very quickly.

It would be wise to sort everything before you go.

Rate cut 0.25% after a 5-4 vote. I was expecting the BoE to hold the line like the US Fed did yesterday but it seems the BoE is more confident.

There have already been some lender rate reductions yesterday/today - hopefully there'll be more (and more substantial ones) in the coming days.

If someone has just received an offer from the bank but yet to complete, can we go back to the bank to ask for a review?

Btw, @Ticha, just want to give a special shout out to you.

Goodenoch:
Rate cut 0.25% after a 5-4 vote. I was expecting the BoE to hold the line like the US Fed did yesterday but it seems the BoE is more confident.

There have already been some lender rate reductions yesterday/today - hopefully there'll be more (and more substantial ones) in the coming days.

twizzie:
If someone has just received an offer from the bank but yet to complete, can we go back to the bank to ask for a review?

Btw, @Ticha, just want to give a special shout out to you.

Aww thank you!
Yes go back to them for a review of rates. If they've reduced their rates, they should be able to offer you the reduced one. You don't ask, you don't get o!
Good luck and keep us posted

I want to advise you guys to be looking at buying property at auction uo north very cheap especially for cash buyers. You can get some propert as low as 30k to 50k.

abuhusna1:
I want to advise you guys to be looking at buying property at auction uo north very cheap especially for cash buyers. You can get some propert as low as 30k to 50k.

Don't forget to also add the pitfalls of auctioned properties........ 🤣😁

Make first time cash buyers, no go buy wetin go hook them for throat........ 😉

Lexusgs430:


Don't forget to also add the pitfalls of auctioned properties........ 🤣😁

Make first time cash buyers, no go buy wetin go hook them for throat........ 😉

I posted it for investors basically or those that wants second property
Somebody like me is a property investor so I rather buy lots of cheap houses and pay stamp duty than buy one house for high price cos I mostly buy auction with cash. Just brought it here so other cash investors can tap in. The return 40k house will give you here is bigger than what 100 million naira house will give you in naija cos you can rent 50k house our fo 6k pounds per year in the uk but you can't rent 100 million house out 12 million per year in naija and most of those auction houses already have tenants paying rent

Ticha:


Yeah we've moved back to the UK for now.

....

Yeah expat mortgages usually are at a higher interest rate. There are only a handful of lenders that will lend to expats and all are through brokers. Even Natwest International HSBC. You will incur higher rates, broker fees and it seems also the lenders legal fees. It gets very expensive very quickly.

It would be wise to sort everything before you go.

Interesting.. Quite a vague area. Na 10yr mortgage I go target if possible.

Care sharing more info about the bolded? Did you achieve your objectives?

jedisco:


Interesting.. Quite a vague area. Na 10yr mortgage I go target if possible.

Care sharing more info about the bolded? Did you achieve your objectives?

We went to NZ on a whim so there were no objectives to achieve per se. A transfer opportunity came up and we jumped at it. It also gave us an opportunity to live in Australia as well. I think if we had to fund our whole move them, we wouldn't have done it. Covid lock downs meant we were there long enough to qualify for citizenship so got it as well as set ourselves up financially well for the rest of our lives hopefully. We also thoroughly visited and explored many countries in the Pacific - as you know waka aboutery is my favourite past time!

To be fair, I'm totally disenchanted with NZ and have been for about 3 years. It may well be a me issue 😅😅 although quite a few of our friends that are doing well there are also planning a move out.

In terms of financial growth, we exceeded our expectations and plans hence being able to choose our next location based on largely emotions and family ties. It comes to a time in life where earning more takes a back seat and I think we're there now.

We had a choice of US, Canada and UK/Ireland. We very very strongly considered Canada (Vanc and Toronto) and spent 2 months there in 2022, viewing houses and talking to employers and extended family but it did not make any financial sense at all and would set us back several years. At worst, we want to remain where we are financially.

Next bigger consideration was Dublin. Dublin would have been a fully funded move but in the end, being able to see family on a whim won out!

So we're back home and have promised our eldest - he particularly asked - that he won't have to change schools again and will finish in one school (he's going into his 4th school in 3 countries so I don't blame him!).

So we're here for the next 8 years till the younger ones finish secondary school and we get to spend lots and lots of time with our aging parents (all in their 70s)

After that, who knows?!

In the meantime, we've bought a project of a house and that should keep us busy as well as exploring Europe.

jedisco:


Hmm.. might be worth asking them what it'd take to satisfy AML. A letter from each of them stating the reason?

I wonder if a different solicitor might see things differently. Perhaps others could throw share views.
Reason why I've not been a fan of 'adashe' in the UK. There are good saving options where you could even earn interest.

please recommend some for me

Ticha:


We went to NZ on a whim so there were no objectives to achieve per se. A transfer opportunity came up and we jumped at it. It also gave us an opportunity to live in Australia as well. I think if we had to fund our whole move them, we wouldn't have done it. Covid lock downs meant we were there long enough to qualify for citizenship so got it as well as set ourselves up financially well for the rest of our lives hopefully. We also thoroughly visited and explored many countries in the Pacific - as you know waka aboutery is my favourite past time!

In terms of financial growth, we exceeded our expectations and plans hence being able to choose our next location based on largely emotions and family ties. It comes to a time in life where earning more takes a back seat and I think we're there now.


.

Good stuff, you seem to be enjoying good life experiences while raising kids which is something very few can do. The bolded made me smile... far exceeded? That's important- absolutely agree with you only that getting to that destination many times requires earning more which then becomes the ultimate reason why many move. The goal is working cos one wants to and not cos one has to.

I'm surprised you did not consider the U.S. epecially for the leverage it'd give your kids if needed. In tech, most of the money created over the last 2 decades have been in the U.S. even well established English companies are looking to port. Is it the political/cultural environment that put you off?

I'm headed towards Can but given how long I've spent here would structure my move in such a way that I can return with little hassle within 3-6yrs. Not that I'm planning to but just in case. I've noticed I generally tend to have big life moves after every half a decade- not as frequently as you. Know a few colleagues and an increasing number who were my 'guinea pigs' on this move. So far, na testimony dem dey give. Mk I go before the money finish.

bharkarh:
please recommend some for me

A good thing about the UK is the generous savings allowance each person has i.e the amount of money you can save or invest yearly without ever paying tax on the gains. It's currently 20k (25k from next year). This is about the most tax efficient means of saving and since most wouldn't maximise it, no need to look further.

1. LISA. The govt gives you 1k. Total you can put in in 4k per year. You also have the option of cash LISA or stock and shares LISA
2. Cash ISA- fixed or flexible if looking to buy soon. The returns had been low until just recently. Now interest rates are falling, the interest on them would also fall. If you are not looking to buy immediately and have spare cash around, then this might be a good time to lock in better rates for 6m - 2 yrs https://www.moneysavingexpert.com/savings/best-cash-isa/

3. Stock and share ISA- Personally, I'd say if your timeframe is above 3yrs, this might be a better option. It comes with the risk that unlike a cash option, you might lose money but overtime, the market tends to trend up and should well outperform interest on cash. Your time treshold (e.g 3 or 5 years) would all depend on your risk appetite. Most global indexes have historically yielded 5-8% above inflation on average which cash would not come close to. To give an example, a while ago, I was looking to buy within a 2 year window used the cash isa offerings (in addition to LISA) and got upto 3k at least aside LISA bonus over the period I was in. Now, I'm looking at a rental and chucked the sum saved in a global fund as I'm not bothered about how soon or not I do it. I've attached the portfolio screenshot (shaded area= net contributions). It's up 13% within a year. Cash over this time would have been 3% max. Infact if you asked me 2 weeks ago, the returns were over 20%. It's that volatility you don't have with cash.

N.B. putting 4k in a LISA leaves you with 16k balance for the rest. You could split between all three if undecided.
P.S. I see you are also on the UK to Canada bus-stop. Also worth considering but don't let it deter you too much

Ticha:


We went to NZ on a whim so there were no objectives to achieve per se. A transfer opportunity came up and we jumped at it. It also gave us an opportunity to live in Australia as well. I think if we had to fund our whole move them, we wouldn't have done it. Covid lock downs meant we were there long enough to qualify for citizenship so got it as well as set ourselves up financially well for the rest of our lives hopefully. We also thoroughly visited and explored many countries in the Pacific - as you know waka aboutery is my favourite past time!

To be fair, I'm totally disenchanted with NZ and have been for about 3 years. It may well be a me issue 😅😅 although quite a few of our friends that are doing well there are also planning a move out.

In terms of financial growth, we exceeded our expectations and plans hence being able to choose our next location based on largely emotions and family ties. It comes to a time in life where earning more takes a back seat and I think we're there now.

We had a choice of US, Canada and UK/Ireland. We very very strongly considered Canada (Vanc and Toronto) and spent 2 months there in 2022, viewing houses and talking to employers and extended family but it did not make any financial sense at all and would set us back several years. At worst, we want to remain where we are financially.

Next bigger consideration was Dublin. Dublin would have been a fully funded move but in the end, being able to see family on a whim won out!

So we're back home and have promised our eldest - he particularly asked - that he won't have to change schools again and will finish in one school (he's going into his 4th school in 3 countries so I don't blame him!).

So we're here for the next 8 years till the younger ones finish secondary school and we get to spend lots and lots of time with our aging parents (all in their 70s)

After that, who knows?!

In the meantime, we've bought a project of a house and that should keep us busy as well as exploring Europe.

How about the US? Sounds like you eliminated it from consideration early on.

Any particular reasons why other than wanting to be closer to family?

It's very high-paying in my field and we're considering it in the medium-term, so trying to gather perspectives.

Thanks.