It’s been a long standing BTL strategy that to continue your BTL journey consistently, you must:
- Buy a property that you can increase in value
- 2 years later remortgage it and take the equity out
- Buy another property
Sounds simple right?
In principal, yes. In practice, it can be a little bit trickier.
The reason being is that there are TWO checks you must make to determine whether you can actually remortgage.
The first is whether you can actually pull money out.
- Download the Remortgage_Analysis spreadsheet
- Calculate how much rent you are expecting to get from the property on a £/pcm basis – input this in cell H5
- In cell C6 input the price you purchased the property for
- In cell C7 input the deposit you had when you brought the property
- In cell C8 input the amount you’ve currently borrowed on the property (please note if £0, put £0)
- In cell C12 input the ‘how much your property should be worth now’ figure, from the previous exercise
The second is whether it actually meets mortgage lending stress tests.
First check that the rental income you are anticipating getting on a monthly basis (you put this in cell H5), is the same or in excess of the figure in cell I8.
If it is, fantastic, the property meets the requirement for lending stress tests.
If it’s not, then you should lower the new value of the property in cell C12, until you can get the rental income you are anticipating getting on a monthly basis (you put this in cell H5), is the same or in excess of the figure in cell I8
Finally, the cash that you should be able to take out of the property is in cell C17.
What figure did you get?
This is the process you should go through EVERY SINGLE TIME.
Was this useful for you? Comment below. Don’t forget to subscribe to this blog by hitting the red bell in the bottom right corner fo the screen.
P.S This is a sneak peak at the type of awesome content you will get in the Members Club. Want to know when it’s open next? Join the WAITING LIST NOWand I’ll let you know when it’s next open.