Interest rates

[Mansfieldman750]

1 - Base rates won’t fall anytime soon, most lightly stagnate from where they are now.
Two years down the line, you may see long term fixed rate products hit the market locking in at softer rates than the 6% currently offered.

Right now is the worst time to lock in…!!!
People needed to fix 6-8 months ago. If I was remortgaging now, I would switch to interest only and ride out the storm…

2 - House prices will fall, how much will obviously be area dependent. Where I am, will probably fair quite well. Lots of local investment and building work at Coventry/Warwick Universities, HS2 and Birmingham South redevelopment.

Yes there are bound to be exceptions. What about Bridgewater ? Hinkley Point C just up the road and now the Tata Gigafactory. Boom town.

 

[pjm-84]

1 - Base rates won’t fall anytime soon, most lightly stagnate from where they are now.

Two years down the line, you may see long term fixed rate products hit the market locking in at softer rates than the 6% currently offered.

My 5yr fixed on my BTL expires on the 1st Sept. I've moved it to a fixed at 5.74% rather than the SVR of 8.9%. Remember BTL mortgages are more expensive. 2yr fixed was 6.7%. So the expectation is a drop in the 2yr

 

[Amarillo]

1 - Base rates won’t fall anytime soon, most lightly stagnate from where they are now.
Two years down the line, you may see long term fixed rate products hit the market locking in at softer rates than the 6% currently offered.

Right now is the worst time to lock in…!!!
People needed to fix 6-8 months ago. If I was remortgaging now, I would switch to interest only and ride out the storm…

2 - House prices will fall, how much will obviously be area dependent. Where I am, will probably fair quite well. Lots of local investment and building work at Coventry/Warwick Universities, HS2 and Birmingham South redevelopment.

1- it is a horrible situation having to fix right now. But I like certainty, and fixing for five years gives me that certainty and allows me to work out a strategy to repay the capita.

There are several options if rates do fall, including paying the 2% penalty and refixing, but only worth it if I would be saving more than the penalty by refixing.

2. According to Zoopla, my flats are still *rising* in value. £15,000 in the last month. So the general fall in property prices will be uneven across the country and by type of property.

Our house, which is in the same area as our flats, has crashed in value.

 

[The Blue Merle]

1- it is a horrible situation having to fix right now. But I like certainty, and fixing for five years gives me that certainty and allows me to work out a strategy to repay the capita.

There are several options if rates do fall, including paying the 2% penalty and refixing, but only worth it if I would be saving more than the penalty by refixing.

2. According to Zoopla, my flats are still *rising* in value. £15,000 in the last month. So the general fall in property prices will be uneven across the country and by type of property.

Our house, which is in the same area as our flats, has crashed in value.

Use Rightmove sold prices that zoopla is rubbish as you can enter your own values on what your property is worth.

 

[Amarillo]

Use Rightmove sold prices that zoopla is rubbish as you can enter your own values on what your property is worth.

Zoopla’s algorithm is based on the latest sold price of the property and the price movement of similar sold properties in the vicinity.

So long as you haven’t added a virtual floor or two to your house on the Zoopla website, it offers a reasonable guide to value and is an excellent source for trends. But, of course, there is a significant lag as it takes 1-3 months for the land registry to update its records.

 

[The Blue Merle]

Zoopla’s algorithm is based on the latest sold price of the property and the price movement of similar sold properties in the vicinity.

So long as you haven’t added a virtual floor or two to your house on the Zoopla website, it offers a reasonable guide to value and is an excellent source for trends. But, of course, there is a significant lag as it takes 1-3 months for the land registry to update its records.

Just had a quick look and zoopla under values mine by £80k had estate agent out other day.
My daughter flat is over valued by £20k, a propriety I sold is over valued by £80k (recent) zoopla figures are always all over the place. Rightmove sold prices and estate agents are best.
Estate agents don’t use zoopla to work out valuations as it’s so bad.

 

[Mansfieldman750]

1- it is a horrible situation having to fix right now. But I like certainty, and fixing for five years gives me that certainty and allows me to work out a strategy to repay the capita.

There are several options if rates do fall, including paying the 2% penalty and refixing, but only worth it if I would be saving more than the penalty by refixing.

2. According to Zoopla, my flats are still *rising* in value. £15,000 in the last month. So the general fall in property prices will be uneven across the country and by type of property.

Our house, which is in the same area as our flats, has crashed in value.

I’m going to have one last go at convincing you and then I’ll leave it alone. I promise.
You say you value certainty, right ?
Then why don’t you sell one of the flats, not all, just one, and use the proceeds to rid yourself of all mortgage debt.
That way, mortgage rates are no longer of any interest to you ( excuse the pun )
What could be more certain than that ?
You would still be in the Buy to Let game, albeit a little less so, if that’s where you want to be. Can’t imagine why myself, but I’m not you.

 

[Amarillo]

I’m going to have one last go at convincing you and then I’ll leave it alone. I promise.
You say you value certainty, right ?
Then why don’t you sell one of the flats, not all, just one, and use the proceeds to rid yourself of all mortgage debt.
That way, mortgage rates are no longer of any interest to you ( excuse the pun )
What could be more certain than that ?
You would still be in the Buy to Let game, albeit a little less so, if that’s where you want to be. Can’t imagine why myself, but I’m not you.

An estimated capital gains tax bill of £45,000 is the reason why not.

Selling price £300,000
Purchase price £132,500
Capital gain £167,500
Taxable gain £161,500
Tax + 28% £45,220

In contrast I think my interest payments over the next five years will be about £65,000

But by selling the flat I would lose £75,000 in rental income if I sold one flat.

 

[Mansfieldman750]

An estimated capital gains tax bill of £45,000 is the reason why not.

Selling price £300,000
Purchase price £132,500
Capital gain £167,500
Taxable gain £161,500
Tax + 28% £45,220

In contrast I think my interest payments over the next five years will be about £65,000

But by selling the flat I would lose £75,000 in rental income if I sold one flat.

Then I give up. I’m going back up the Congo with Redmond O’Hanlon.

 

[JimP1992]

1- it is a horrible situation having to fix right now. But I like certainty, and fixing for five years gives me that certainty and allows me to work out a strategy to repay the capita.

There are several options if rates do fall, including paying the 2% penalty and refixing, but only worth it if I would be saving more than the penalty by refixing.

2. According to Zoopla, my flats are still *rising* in value. £15,000 in the last month. So the general fall in property prices will be uneven across the country and by type of property.

Our house, which is in the same area as our flats, has crashed in value.

take Zoopla estimates with a pinch of salt. They make a host of assumptions about

1- it is a horrible situation having to fix right now. But I like certainty, and fixing for five years gives me that certainty and allows me to work out a strategy to repay the capita.

There are several options if rates do fall, including paying the 2% penalty and refixing, but only worth it if I would be saving more than the penalty by refixing.

2. According to Zoopla, my flats are still *rising* in value. £15,000 in the last month. So the general fall in property prices will be uneven across the country and by type of property.

Our house, which is in the same area as our flats, has crashed in value.

As a surveyor, I’d advise taking Zoopla estimates with a pinch of salt. They make a host of assumptions which will very likely be inaccurate leading to large inaccuracies in values. Sure, it’s a very fag packet “ballpark” INITIAL figure but I wouldn’t rely on it to measure shifts in values as there’s likely at least a £25K - 50K +/- discrepancy at all times (dependent on value of course…).

 

[soulstyledevon]

As a surveyor, I’d advise taking Zoopla estimates with a pinch of salt. They make a host of assumptions which will very likely be inaccurate leading to large inaccuracies in values. Sure, it’s a very fag packet “ballpark” INITIAL figure but I wouldn’t rely on it to measure shifts in values as there’s likely at least a £25K - 50K +/- discrepancy at all times (dependent on value of course…).

The house next door changed hands for the first time in 50 years.
The guy that lived there, passed away and the two daughters inherited the property.
One daughter bought out the others half, and now the house value according to Zoopla is £380k-£571. Which is the same price as a semi in the area and the swing from low point to high is so great, that it doesn’t give an accurate value at all.
It’s a few hundred thousand out and as such the Zoopla valuation becomes utterly pointless.

Definitely take Zoopla with a pinch of salt…

 

[pjm-84]

Just had a look at Zoopla for mine. I think its circa £575k+ and Zoopla has a £560 to £630k value. Oddly the next door house is the mirror opposite and Zoopla thinks this is worth circa £584 to £645k.... because the data it holds is newer for that property

What Zoopla doesn't account for is the £75k extension that I added to the rear of my house and internal changes to improve / increase the living spaces on the ground floor. The original house had a separate kitchen / and small 8ft x 8ft dining room. We have a open plan kitchen dining room and living area that open onto the garden. (Typical Grand Design)

 

[Amarillo]

As a surveyor, I’d advise taking Zoopla estimates with a pinch of salt. They make a host of assumptions which will very likely be inaccurate leading to large inaccuracies in values. Sure, it’s a very fag packet “ballpark” INITIAL figure but I wouldn’t rely on it to measure shifts in values as there’s likely at least a £25K - 50K +/- discrepancy at all times (dependent on value of course…).

How is it for showing trends.

Here it is showing 2 bed flats up in value slightly and significant drops in house prices.

 

[Amarillo]

Just had a look at Zoopla for mine. I think its circa £575k+ and Zoopla has a £560 to £630k value. Oddly the next door house is the mirror opposite and Zoopla thinks this is worth circa £584 to £645k.... because the data it holds is newer for that property

What Zoopla doesn't account for is the £75k extension that I added to the rear of my house and internal changes to improve / increase the living spaces on the ground floor. The original house had a separate kitchen / and small 8ft x 8ft dining room. We have a open plan kitchen dining room and living area that open onto the garden. (Typical Grand Design)

You can edit Zoopla and add your extension.

 

[pjm-84]

Not that bothered to be honest. It was just an example.

 

[GrumpyGranddad]

An estimated capital gains tax bill of £45,000 is the reason why not.

Selling price £300,000
Purchase price £132,500
Capital gain £167,500
Taxable gain £161,500
Tax + 28% £45,220

In contrast I think my interest payments over the next five years will be about £65,000

But by selling the flat I would lose £75,000 in rental income if I sold one flat.

Eventually you’ll probably need to sell them all Tom (no pockets in a shroud).
Your CGT bill won’t go away. Might be a good plan to phase sales over a number of years? Even the Tory outline plan to scrap IHT will undoubtedly have strings attached.

 

[The Blue Merle]

You can edit Zoopla and add your extension.

Rightmove sold prices is the best normally still has pics,layout diagram of property so you can compare.

Good more if I was you I wouldn’t sell either, you never mentioned solicitor and estate agent fees on top of them capital gains.
But even more important you would make your tenant homeless. Just ride the storm

 

[Amarillo]

Eventually you’ll probably need to sell them all Tom (no pockets in a shroud).
Your CGT bill won’t go away. Might be a good plan to phase sales over a number of years? Even the Tory outline plan to scrap CGT will undoubtedly have strings attached.

28% CGT (on the gain) is certainly more attractive than 40% IHT (on the value).

 

[soulstyledevon]

28% CGT (on the gain) is certainly more attractive than 40% IHT (on the value).

Can you avoid capital gains if the property becomes your main residence and you live there for 6 months…?

 

[Amarillo]

Can you avoid capital gains if the property becomes your main residence and you live there for 6 months…?

Short answer, no.

Long answer, a property that has been used as both a main residence and BTL is subject to CGT for the proportion of time is has been used as a BTL.

For example, one of my flats was my main residence between May 1990 and August 2011, 256 months. It has been used as a BTL since then, 143 months. I think you are allowed to deduct three months grace so 140 months CGTable.

I paid £57,000 for the flat.
The Zoopla estimate is £378,000 (+/- £377,000 due to Zoopla algorithm inaccuracies)
Capital gain £321,000
Adjusted gain £112,631 (divide by 399, multiply by 140)
Taxable gain £106,631 (£6,000 CGT free allowance)
CGT + 28% £29,856

 

[soulstyledevon]

I paid £57,000 for the flat.
The Zoopla estimate is £378,000 (+/- £377,000 due to Zoopla algorithm inaccuracies)

 

[willwander]

something to think about on a rainy Sunday.

@Amarillo borrowed £50 from @soulstyledevon and £50 from @GrumpyGranddad to buy a chicken costing £100. After the purchase, he had £3 left.
He returned £1 to @soulstyledevon and £1 to @GrumpyGranddad, and kept £1 for himself.
He now owes £49+£49=£98 plus the £1 he kept for himself, which equals £99….
So where’s the missing £1?

 

[Mansfieldman750]

something to think about on a rainy Sunday.

@Amarillo borrowed £50 from @soulstyledevon and £50 from @GrumpyGranddad to buy a chicken costing £100. After the purchase, he had £3 left.
He returned £1 to @soulstyledevon and £1 to @GrumpyGranddad, and kept £1 for himself.
He now owes £49+£49=£98 plus the £1 he kept for himself, which equals £99….
So where’s the missing £1?

He used it as collateral to buy another chicken.

 

[soulstyledevon]

Amarillo had savings to begin with…

 

[GrumpyGranddad]

something to think about on a rainy Sunday.

@Amarillo borrowed £50 from @soulstyledevon and £50 from @GrumpyGranddad to buy a chicken costing £100. After the purchase, he had £3 left.
He returned £1 to @soulstyledevon and £1 to @GrumpyGranddad, and kept £1 for himself.
He now owes £49+£49=£98 plus the £1 he kept for himself, which equals £99….
So where’s the missing £1?

Don’t know but @Amarillo still owes me £49. Tom I’ll PM my bank details