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66

The existing mortgage is for that house on that land. It's (almost certainly) an "owner-occupied" mortgage. Thus, you'll have to talk to the bank. They'll want you to refinance the property (which pays off the original loan) with a new "commercial" mortgage (probably at a higher interest rate).


52

A mortgage is a secured loan, like a car loan. A secured loan has collateral - the thing of value that backs up the loan. When the collateral stops having value, the loan principal is immediately due in full. Normally, insurance takes care of that. In practice, if they catch you, things could turn ugly for you. They could immediately call the note. Now ...


30

Welcome to Money.SE. You know, questions like this can help point out good/bad for a given choice, but there isn't likely to be a 'right' answer. I can offer a well reasoned answer, only to find another respected member offers the exact opposite. Given the way you frame the question, I'd prefer the 'worse' house in the 'better' area. As you suggest, its ...


15

Leading up to the last big housing dip, many people borrowed near their limit planning on increased home values to provide them with equity, many of them were stuck in a bad spot when home values dropped. I don't know UK bank policy, but in the US a standard mortgage can be issued that makes your total monthly debt payment up to 45% of your gross income. In ...


14

Simple answer, they are in the banking business not the landlording business. The same reason a coffee shop won't sell you a car even if there was some scheme where it benefitted them.


10

Is there anything else I could do to make sure my offer got accepted and I do not get outbid? Having been in this position both as buyer and seller, the only thing that springs to mind is getting the seller to like you. This is of course tricky if you haven’t met. Conventionally, all the contact is via the agent. (We were lucky in that our second viewing the ...


8

You are underestimating the costs and risks to the bank The basic idea here is that buying a house isn't a cost-free process, owning and renting a house isn't cost-free or risk-free, dealing with a delinquent tenant isn't cost-free or easy, and the bank doesn't get much value out of your happiness or housing satisfaction. Buying a house costs a lot of money. ...


5

The government's own info on using Lifetime ISA funds to purchase your first home here, state that The home you buy must: - be in the UK - have a price of £450,000 or less - be the only home you will own - be where you intend to live - be purchased with a mortgage That first point appears to rule out what you want to do. So to use the Lifetime ISA funds ...


5

One joint owner moves out and does not contribute to the support of the property for 11 years. That's completely irrelevant to the issue of ownership, and thus distribution of the proceeds of sale. EDIT: for example, you (probably) owning shares of stock, and get dividends -- aka money -- from those shares, even though you don't "contribute to the ...


5

The correct answer to this is nobody knows. The reasons for this are simple: You are assuming that the "worse area" will never become a "better area". There are some places in the UK which historically have been seen as poor areas and then received investment and become "re-generated" such that house prices have risen ...


4

The real estate market will have its ups and downs and there's no guarantee property prices will go up but buying a good house in a bad area (that's showing no signs of improvement) is always a losing bet. Buying a "lesser" house in a good area will, at least, give you a fighting chance. Choose the best area you can afford, even if the house ...


4

From the purely monetary viewpoint in which you are asking the question, I agree with Vicky that you should consider what "can afford" really means - calculate what you will be comfortable paying at the moment, what you can pay if Covid lasts another 2 years and the housing market tumbles into chaos or if a vaccine is available tomorrow & the ...


4

I think there are two factors to balance out here: Buy the most house you can afford Be realistic about what "afford" means In general, it is a good idea to buy as much house as you can afford - effectively taking a step-and-a-half on the housing ladder rather than just a step. However, in working out what you can afford, don't just take the bank'...


4

First, when you buy a house with a mortgage, the bank does not "own the house until I've paid it anyway". You own the house from day 1, and you owe money to the bank. Practically, since the loan is secured by the house, the bank shares some of the risk of the house, in that they may lose if its value drops below your loan balance. But your down ...


3

The key to getting your offer accepted is to not get married to a house you don't own. Your offer WILL be accepted, on a certain house, by a certain seller. Your negotiating position is exactly as strong as your ability to walk away from it, vs the sellers'. If you decide that for some reason this house is the only house you could possibly ever buy, the ...


3

The vast majority of home mortgages are sold to the government backed lending companies, so many lenders only deal with loans that conform to the standards that guarantee they can sell them. This means a certain percentage down, debt to income ratio, credit score, etc. Taking on your situation introduces more risk than their standard loans. You might find a ...


2

Purchasing a condo typically requires input of monthly condo fees - these pay for things like common areas, perhaps security, perhaps some utilities, and likely some type of common repair fund for future maintenance. Purchase a 'freehold' unit [whether a house, or freehold townhouse, etc.], typically has no monthly maintenance fees, but the burden of ...


2

There are many banks that do operate in the way you describe. The bank buying the house and you renting it from the bank and then paying an additional amount to purchase the house over time is called an Islamic mortgage or Islamic home loan. With an Islamic mortgage the bank becomes your landlord and because of the structure of the transaction, no interest ...


2

Octavian mentioned it already but - whyever - got downvoted. I only want to emphasize that the location matters most. I would even say it is clear obvious. Consider you own 10 squaremeters at the NY Times Square or 10 squaremeters somewhere in the outback. Even when you build only a dog house in NY and the most impressive mansion in the outback, the location ...


2

I am not sure buying is a good idea at all in your situation. You say you want to buy it as a 'stepping stone', that you intend to keep it for 5-15 years. This suggest to me: You expect the house price to go up in the next 5-15 years, i.e. you see buying a house as a better investment than a diversified market portfolio You probably see renting as 'throwing ...


2

In my opinion the best way to start any business is to boot strap it, that is relying on income from another source until you learn the business well enough to where you can make progressively larger leaps. On the surface, it would seem, that real estate is a massive leap but there can be smaller steps to help you learn the business. One of the least risk ...


1

The only way to get into investing is by starting to invest - everyone starts somewhere. Make sure you allocate your risks and really do the math without bias or desire. You mentioned that you want to cover at least your mortgage, its not worth it if you're covering just the mortgage. Make sure you have positive cashflow just in case you have any unplanned ...


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