Mortgages and Easy Repayment Charges

Samuel Leeds

Mortgages and Easy Repayment Charges

Hello everyone, welcome to another blog where I answer your questions regarding property investing. 

Each week on Sunday, I answer your questions on the previous YouTube video. If you also have a question, be sure to head straight to my channel and comment it so that I may answer it next week!

Let’s get started. 


George C.: If I had 250,000 pounds, would it better to invest in two cheaper houses or one expensive house? I want the house/houses to go up in value, so which one do you think would be best? 

George, I would advise you to get two houses so that you may get maximum return on investment. See, when you have two houses, you will be getting rents from both of them instead if you bought only one. Moreover, you may have more houses by taking mortgages from banks!


Burning Desire: With someone wanting to scale up, would you recommend buying lots of cheaper houses or investing in bigger deals? The smaller deals won’t generate much appreciation but will give better yields, however, they will be in ghetto areas. Bigger deals would mean scaling up slower. Shall I get lots of small deals and sell them in five years and save up for development Jv projects where I could get 50k a project by investing in 200k? 

When you’re looking for houses, make sure you get them at the cheapest prices! People it’s just paper money so 110 grand or 105 grand wouldn’t be much different. But hey, if you were to take out five grand from the ATM, and just left it there, imagine how devastated you would be! Therefore, always ask the owner for the lowest price they are willing to sell the house at. 


Vicki Ferrera: I’m a 65-year-old woman and just bought a house in the UK. Instead of living in it, I decided to rent it out. I paid cash 140k pounds, but now want more with 100% equity. Should I get a bank mortgage on it, is that what you mean by refinancing? I also do not know what rent-to-rent means, is that the same as subletting? 

Let me start with the first question: yes, when you get a mortgage from a bank on the property, you invest it on the house, that’s refinancing. 

Then you asked about rent-to-rent. It is not subletting. Subletting is when you’re a tenant and you bring in more tenants without consent from the landlord. That is illegal. Rent-to-rent is legal and is done with a proper management agreement. Hope it helps!

Paulina: We live in a property with the right to buy. If we buy it, we can’t sell it for the next 10 years, however, we can rent it out. The house is heavily discounted and I’m thinking of buying it, getting a mortgage on it and renting it out. With the profit between the mortgage and renting, I will get another property to live in. How would you go about it? Would I be able to get a standard mortgage or two mortgages? 

Paulina, one of my students from 2014 did the exact same thing you’re talking about! You’re on the right track, you can definitely execute your plan. 

As for the mortgage, when you’re getting it to rent the property, you go for a buy-to-let mortgage. If you’re getting it for your own home, you get a residential mortgage. You may get both, or even two residential mortgages if your landlord allows. 


Ifuss: How do you know if an estate agent is legitimate? Is there any protection from the government against fraudulent estate agents? 

There is government protection from fraudulent anything. You can’t be fraudulent and keep doing business here. 

As for finding if they are legitimate, see if they are registered with a property ombudsman, look at their reviews, etc. I don’t think an estate agent can do you harm because they don’t charge you anything, they charge the seller and show you the house. 


Jiffin: Will you ever buy a home to live in for the rest of your life? 

Buying a home doesn’t make financial sense to me. There would be so much money tied up in the form of a property that wouldn’t give me any returns. The only way I’d be buying a property would be if I LOVED the home, and wanted to live it in for the rest of my life. 


Hella-flush: The part where you talked about your car, did you buy that outright to get that year’s tax expense up to 126k instead of deducting it over 5 years or so? 

Unfortunately, I don’t get any tax deductions on my car. I have a Range Rover and I didn’t buy it outright for the same reason that I don’t want to put all of that money locked up at once. Before that, I always leased my car; my wife also leases her car. 


Zaid: Let’s say you’re following the BRRR strategy and get a bridging loan to cover for 80% of the cost to buy a 100k property. On the top of the 20k down payment, you will also need funding to refurbish the property before refinancing. Where does this money come from? Can you somehow use the bridging loan for this?

Yes, there are companies that give you bridging finance for development so you can do that!

rent to rent

Pyroo: I have found a 7-bed HMO for 145K at 27% ROI. If it is a good deal, how may I pass it onto an investor as I’m only 15? 

Oh my God! First of all, massive respect for you as you’re only 15 and have started doing this! You’re young and it may be hard for you to set up a company, so my advice for you is to find a company that deal sources and tell them that you have an amazing deal and ask them if they’d be interested in a little kickback. 


Tyrone Saxton: the government is printing and paying out all of this money, e.g. Through Furlough through grants and loans. How do you think the government will recoup this money back? Do you think they will raise taxes next year? 

I don’t think they will raise taxes. But you’re right that they are printing money. I think, and this is my personal opinion, I don’t want to create a conspiracy theory out of it, is that I think the government wants the economy boosted and wants us to rely on them more. When they give out money to people, the people will have to pay the money back and will become controlled by the government. It’s the same thing when governments lend out money to other governments. 


Dolev: I am in Israel and want to invest in London soon. I want to have an HMO and rent it out. I want to ask if I will always have tenants and if it is a good area the HMO will work all year. Another question is that there are months when there is less success and my annual average income goes down. I want to know about the other methods you teach in this course. 

You won’t have a problem renting out HMOs in London, generally speaking. They are full all-year round. London is expensive and you’re not going to get much ROI but you’ll get rent all-year round. Speak to an HMO management company before you buy!

Samuel Leeds

Ciaran: How do you raise capital/ find joint venture partners for development? 

I’d say get good deals for development. Investors are on the lookout for amazing deals that will bring them money. They are looking for a systemized deal where they put their money in and it’s easy. Moreover, put yourself out there so that people would know that you’re looking for investors. Furthermore, know how to ask for money using the right language. 


James Watson: When refinancing, do you go to your original mortgage provider for the revaluation or go to a new provider as obviously there is ERC to consider and that has an impact on both you and the ROI?

When you are going to pay ERC, it doesn’t matter if you go to another mortgage provider because you have to pay it, it’s fixed. However, I wouldn’t go to one mortgage lender, I would talk to an independent broker and let them look across the board to get good deals. 


Stebrandon1: How do I release a mortgage from an equity I’ve only had for a month?

Look, if you’re refinancing a mortgage that’s fixed, you would have to pay ERC. You can do two things, either you swallow the fee because you know you’re going to get good ROI from the investment from the money, or you look for a lender that would give you a second charge. 


Naomi Manganye: Would you start a rent2rent from a Ltd. or a sole lender? If some trader, when will you do the switch? Are there any bodies that are must for legal compliance? 

I would recommend you work with a Ltd. company because that will protect you. If something goes wrong, you won’t be sued, the company will be. There are also many tax advantages of working with a Ltd. Hope that helps! 


Michael Bennette: In the future could you do some videos regarding investing in properties abroad? Would be interested to see if the same principles work in holiday homes!

Actually, there was a guy I interviewed who had bought five houses here and followed the principles he learned from me and applied them to properties in Italy. He is actually doing better than here!


Uzair: I have 3k saved, what would be the best thing to do in property, I’m only 18? 

Listen, you can’t do a lot with 3k pounds in property. You may get a small rent2rent. But I suggest you spend the money on your education and get knowledgeable as much as you can. 


Surrender: When buying a property through a bridging loan, I understand it’s a cash payment. However, to an estate agent, is it still considered borrowing against the property or a cash purchase? 

Normally, you call it a cash purchase. Everything is actually a cash purchase, you just get the cash from a mortgage. Usually estate agents want to know where you’re getting the money from because they want to sell you their mortgage products. 


Jacob Klaire: I’m going into university and I’m interested in property, what courses do you recommend? 

Listen, don’t go to university just for the sake of going to university. If you want to learn about real estate, find people who can teach you about it! Look for jobs in property. Trust me, you will learn more than they teach in a university!


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