If it doesn’t happen now, it never will…

Sometimes we put an irrational amount of pressure on ourselves to achieve our financial goals. When we aren’t feeling at our best, we beat ourselves up, especially when we unconsciously compare ourselves to our ‘age mates’ which at times can feel like they are winning this invisible race society has created.

Make no mistake, I don’t question the happiness of those people who have posted their version of success on social media (which at times could be glitter not gold) however, what I question is our ability to asses whether we are allowing said news to contribute to the ridiculous amounts of pressure we put on ourselves, all because:

“I’m almost *insert age here* and I’m not married”

“I’ve been working my butt off, but can’t seem to save” 

“I Should be further ahead in my career at my age”

“I should be buying my 1st home by now”

“I  *insert negative self talk*

Social media has amongst other things created urgency to achieve things simply because everyone on our feeds are sharing their wins all at the same time.

Once upon a time in what we now call the dark ages (before facebook) we didn’t really have exposure to so many other ‘lanes’. Of course we would hear about other people’s successes, but it wouldn’t be so in your face.

What’s your point Joseph?! In short I’m pretty certain we as a society have become impatient. We are a generation that thrives of INSTANT gratification. 

This is by no means a message to bash social media or encourage you to go off grid, but actually the key message I want you to take away from this is to stop. Take a breather. Stop putting yourself under the wrong kind of pressure. I guess it is a longer way of saying trust the process, and stay in your lane. 

Task:
Think about the thing that is distracting you from your lane, realign yourself and go at your pace. 

P.S. the more time you spend worrying and beating yourself up the less time you are spending on achieving your dreams. You’ve got this! 

Buy-to-Let Mortgages for First Time Buyers & First Time Landlords | Q & A Series

For the remainder of the year I will be dedicating all posts to answering Questions from our readers. Have you got a question or would you like me to cover something I haven’t written about in the last few weeks? Scroll down to the bottom of this post and reach out to me via any of the listed channels. 

“I live at home with my parents, but I want to buy a property and rent it out. Is this possible?”

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Yes, this is called a Buy to Let property and you’ll need a 15% deposit. However, you cannot buy these kind of properties using a Government scheme.

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Today we are going to focus on the Buy to Let Mortgage, but you also have the consumer buy to let and consent to let route.

Here’s a quick breakdown of the other two types of letting routes which we are not going to discuss today:

Consumer Buy to Let – you lived in the property, bought another place/moved back home, got consent to rent out your property from your mortgage provider and eventually remortgaged with another lender on a consumer buy to let mortgage.

Consent to Let – You have a residential mortgage, for whatever reason, your lender gives you permission to let your property for a specific amount of time (e.g 1 Year) or indefinitely. Once you’ve come to the end of this agreed time, you move back in to the property, sell the property or get indefinite permission to Let and Remortgage elsewhere on a consumer buy to let Mortgage product.

How to guide – It’s fairly simple:

  1. Find a property
  2. Find out the average monthly rental income in that area
  3. Agree a purchase price
  4. Deposit – have you got at least 15%? **
  5. Apply for a Mortgage
  6. Understand that once the valuation takes place, the surveyor isn’t only valuing the property, but giving a figure for your expected rental income
  7. You get your Mortgage Offer
  8. Touch base with your solicitor and continue the Post-Offer process with them. ..

 

** Some lenders offer 90% LTV (this means a 10% deposit) products for Buy to Let Mortgages. However for a first time landlord, you will have to find the right Broker and search high and low for the right lender as not many lenders lend to First-time buy to let buyers – the common trend is that you have to have your residential property for at least 6 months before buying a BTL.

 

Tax – Something else to think about.

No income goes unnoticed and this is particularly the case for rental income.

The income tax rates for the 2019/2020 tax year are as follows:

  • Higher rate tax band (taxable income of £46,351 to £150,000) = 40%
  • Additional rate taxpayer (taxable income of over £150,000) = 45%

Tax bands are slightly different in Scotland

If you earn £15,000 from renting out your property, for example, the first £11,850 is tax-free, so you will only pay 20% tax on the remaining £3,150, which comes to £630.

However, bare in mind you may also have a full-time job, your rental income will be added to your annual salary, which may increase what you pay in tax.

In any case, the HMRC will work this out for you when you declare your income.

Things to consider:

1.Tax Return – Make sure you do one online before 31st January (or a paper return by the 31st October)

This is important, so that when you remortgage or buy another property, your rental income can be evidenced and used for affordability. Even if your income is below the threshold and your rental income is not taxed, your Tax Return will still need to be done evidencing £0. You also don’t want to get in trouble with the law! 

2. Do you want the property in your name? Limited Company maybe? Explore your options and benefits.

3. Extra income is great, however remember to take unexpected expenses in to consideration. Have an account solely for your rental income and Mortgage payments and leave all miscellaneous money/profit in there. Why? If your tenant doesn’t pay the rent, you need to replace the boiler or an unfortunate event takes place that your insurance doesn’t cover, you don’t want your property to become a devouring burden. The aim of the game is to make your property pay for itself and then some…

4. Managing Agent. Are you going to have your property run by an Estate Agent and simply collect your income at the end of the month? They will respond to any call outs, ensure you get your rent on time even if the tenants don’t pay, deal with your insurance and gas safety certificate etc. Explore your options – remember nothing in life is free, you have to pay the agency.  The management of your property could cost you 10% of your rental income. Are you wiling to take this deduction for peace of mind?

I hope this has helped! I would love to hear your thoughts.

Comment below, get in touch via my various platforms.

Remember if you have a question, the next 4 Mondays could feature yours – just ask!

LinkedIn Ashanta Charm

Twitter  @AshantaLC

Instagram  @Ashanta_

5 Year Plan

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Reading Time: 5 mins

So today we are going to discuss the 5 Year plan and the importance of having a plan. My 5 Year plan has never failed me and I have always accomplished what I’ve set out to achieve.

When I was 16 I started my 5 Year Plan and was able to achieve every single goal throughout the years and when time seemed to be closing in on me, I attained my final goal days before my 22nd Birthday.

So let’s dive right in to it, what type of goals did I set and how did I go about achieving them?

I had my key goals and these were broken down with sub goals or you could almost call them sub tasks that would catapult me closer to the main goal.

  1. Buy a House 21
  2. Start dating and be engaged 21
  3. Pass my driving test 21
  4. Be in my career job 21
  5. Gain weight 21
  6. Overcome complexes and step out of my comfort zone
  7. Be mentally strong. If you stand for something, don’t let an institution, work or anyone shake/break that.

As you can see, my goals were pretty vague, however the older I got, the more padding I added to them and by the end of the 5 Year period, I was in a much better position than I thought possible.

Over time, my goals became SMART:

  • Specific
  • Measurable
  • Attainable
  • Realistic
  • Timely

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  1. I completed on the purchase of my house 14 days before my 22nd Birthday
  2. I started dating at 19 and got engaged at 21
  3. I passed my driving test at 21
  4. I started working in a huge Financial Institution at 20 and embarked on my Mortgage Career
  5. I went up a dress size
  6. I overcame all personal weight related insecurities and my dress sense affirmed this!
  7. I’ve always been head strong, but I started to become apologetic about it and almost lost my own opinion and stance on given situations hence the goal. By 21 I was definitely mentally stronger and began to challenge the status quo. I stopped saying “yes” and started asking “why”?

Once I had achieved all of my goals, I began thinking about my next 5 year plan. I looked back on all that I had achieved, was extremely proud of my 16 year old self and decided to up the ambition and set new goals a few days before I turned 22. These goals will expire when I turn 26 – I have already achieved a few and am deep in the process of attaining the others. Will I make it? Yes I will!

TEMPLATE

If you’re having difficulties making goals, use the SMART guide above and break your goals down in to 7 Key areas

  1. Relationships (Intimate, family, friends etc)
  2. Investment (Buying a house, shares, business plan?)
  3. Career (Where do you want to be in 5 years? Get your foot in the field, attain relevant qualifications)
  4. Personal Development & mentality
  5. Health/Appearance
  6. Spirit, Character, Core (What do you stand for? Who are you? What are your beliefs?)
  7. Miscellaneous (Something you’ve always dreamed of)

I hope this has helped! I would love to hear your thoughts and goal attaining methods. Comment below or get in touch via my various platforms.

LinkedIn Ashanta Charm

Twitter  @AshantaLC

Instagram  @Ashanta_

5 Year Plan – Have you done yours?