Dentists Who Invest Podcast
Official Podcast of the Dentists Who Invest platform. Talking all things investing, money and finance with a dental spin. Have you ever wondered how you can grow your wealth and protect your hard earned money as a Dentist? We've got you covered. Featuring famous guests such as Andrew Craig, Edward Zuckerberg and Benyamin Ahmed we delve deep into EVERY aspect of finance to educate and empower ALL Dentists.
Dentists Who Invest Podcast
Mortgages Masterclass with Sarah Grace DWI-EP293
Do your mortgages repayments feel high?
Connect with Sarah here: https://www.dentistswhoinvest.com/sarah-grace-mortgages/
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You can download your FREE report on how you can avoid financial mistakes as a dentist using the link just here >>> dentistswhoinvest.com/podcastreport
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How can dentists leverage their unique financial profiles to secure the best mortgage rates? Join us for an eye-opening discussion with mortgage expert Sarah Grace as we dissect the current mortgage market. We'll guide you through the implications of recent interest rate trends, including the potential reduction in the Bank of England base rate and its impact on making fixed-rate mortgages more enticing. Sarah Grace opens up about the fluctuating mortgage demand and anticipates exciting possibilities on the horizon, driven by potential government initiatives aimed at boosting housing supply.
Dentists, this one’s for you! Learn the ins and outs of securing lending tailored specifically for your profession. Sarah shares her expert insights on how turnover and projections can influence mortgage approvals, emphasizing the benefits of focusing on recent pay schedules over long-term profit histories. We also illuminate a success story that underscores the significance of understanding average profits before corporation tax, advising listeners on the importance of staying informed and seeking tailored financial advice.
For those curious about buy-to-let investments or navigating their first home purchase, this episode is packed with valuable information. We delve into the tax considerations for buy-to-let properties, comparing the advantages and drawbacks of using a Special Purpose Vehicle (SPV) versus a personal mortgage. We also address listener questions on buying second homes, leveraging lifetime ISAs, and securing mortgage rates in advance. Don’t miss out on the practical advice and real-world examples that could make a significant difference in your financial planning journey!
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Disclaimer: All content on this channel is for education purposes only and does not constitute an investment recommendation or individual financial advice. For that, you should speak to a regulated, independent professional. The value of investments and the income from them can go down as well as up, so you may get back less than you invest. The views expressed on this channel may no longer be current. The information provided is not a personal recommendation for any particular investment. Tax treatment depends on individual circumstances and all tax rules may change in the future. If you are unsure about the suitability of an investment, you should speak to a regulated, independent professional.
Hello, hello, hello. Good evening everybody. The room is going to fill up momentarily. I'm going to go ahead and switch myself right on the speaker view so that everybody can see me, and pin me right to the front, of course, so I can be the host for most of this evening. I'll be looking forward to this.
Dr James:I really love doing these webinars on anything and everything finance for dentists and you know what? We've been so privileged to meet a very exclusive network of people who really know their stuff whenever it comes to their specific area of expertise, when it comes to serving the dental community. And my guest tonight is exactly that. Her name is Sarah Grace and she knows everything there is to know about mortgages, specifically for dentists. So, guys, this is a wonderful opportunity to ask anything you like on that subject, and I'm looking forward to getting stuck in, because here's the thing knowing this stuff can just about save you quite a fortune of money, maybe even four figures, five, five figures, something along those lines. Of course, no magic wands, we don't want everybody to get carried away, but it's just to give you an idea or illustrate how important this can be. Anyway, Sarah, how are you this evening?
Sarah:hi, James. Yes, thank you for inviting me along this evening. Um, yeah, no, really good hot, but uh, really good yeah I was gonna say it looks absolutely beautiful.
Dr James:We are. I don. I know that we caught up off camera. That is the south of england, not sunny vista in spain, but the south of england yes, it's uh with the southwest believe it or not to the audience. Sarah, you've already got one fan in the chat, uh mitzarine, who said hi, Sarah, hope you remember me. Uh, you helped me buy my first house oh, lovely wonderful, wonderful, wonderful.
Dr James:Always good to have a fan in the audience. Sarah. Wonderful good stuff and plenty of fans. I'm sure there's loads more out there, but anyway, Sarah, we're here tonight to talk about mortgages, of course.
Dr James:So, guys, the way we usually choreograph these evenings is there will be an opportunity to ask anything you like in terms of a question to Sarah when it comes to your mortgages. It's just worth noting, of course, that this will be recorded, so if there's anything very personal in there, you just might want to be aware of that. But we will, of course, answer anything and everything you ask us. Just something to be conscious of what we're going to do. What we usually do to kick off proceedings is we usually start off by dishing out a little bit of knowledge whenever it comes to the subject matter at hand and, of course, as we're here this evening to talk about mortgages, let's do exactly that on the topic of mortgages for the benefit of the audience, and then we can get into the nitty gritty and the specifics for anybody who's watching.
Dr James:So, Sarah, if you think that that sounds fun and you're, game for that, what a nice way to proceed, absolutely, yeah, have you ever heard the expression? Game is a badger. Yes, I didn't know if that was a Northern Irish Pretty girl. Yeah, it means you're really up for it, right, we're both. Game is a badger tonight. I didn't know if it was a Northern Irish expression or not, so I just wanted to check on that one, but anyway, yeah, let's talk about mortgages. So yeah, Sarah, how are things going? How are things going? How's the market at the minute? I know interest rates aren't quite where they once were and everybody's pretty conscious of that, but I know that this year needs to be a question in the whole wide world. But many are speculating out there that they've topped out where they are right now.
Sarah:So what's that done to the mortgage market? Yeah, I think the fixed rates are slightly different to Bank of England base rates. So, bank of England base rate, I'm hoping next month, which is only tomorrow, but in a couple of weeks time, the Bank of England meeting, I'm hoping that there will be a reduction of 25 basis points or quarter of a percent. I think that that will possibly happen because inflation and everything is looking good. But fixed rates are already priced based on what they predict the future Bank of England base rate and the markets around the world.
Sarah:So there's a direct correlation with bond prices, because that's how fixed rates are worked out and we started seeing bond prices over the last few weeks falling and so therefore we started seeing fixed rates falling and I think, really, where we're at now, two-year fixed rates are the cheapest that they've probably been for around a couple of years. The five-year fixed rates, yeah, we've nationwide. We're the first to break the 4% last week or just over a week, I'm not sure where that was, uh, so, um. So, yeah, we're starting to see the fixed rates certainly coming down and and now you can fix in a two-year and a five-year fix quite a lot below bank of england base rate there, we are good stuff, and how has that affected demand?
Dr James:have you seen things pick up recently?
Sarah:uh, yeah, like we've been, we've we've been really busy. Uh, what? What month June we were. We were absolutely flat out in June. July started off very, very busy, but the last week we can tell people are on holiday, you know, with the uh, with the kids breaking up from school and that sort of thing has quietened down on the phones a little bit. But yeah, you know, june was our best month this year for mortgage submissions. So it is getting busy and I'm expecting that to continue with Labour government getting in. You know they're sort of saying that they want to build one and a half million homes. So I think that you know the next few years are probably going to be quite busy.
Dr James:I see, and are people going just as big as ever and splashing out on their homes their million dollar mansions, or maybe not quite what it used to be, given that generally people are a little bit more stare at the minute.
Sarah:Oh no, Dentists. They're a different breed, they always want to borrow the absolute maximum and all of that. So yeah, because I deal with a few doctor clients, you know, as in medical doctors, and they're a little bit more cautious. But dentists I've not noticed anything different with.
Dr James:Uh, with dentists no still going large, still living the best life, still looking for the dream home, asap. Yeah, okay, fair enough. I mean I get the logic. I mean I get the logic. So fair play, okay, cool. So that's what you're seeing out there at the minute. Anything else dentists should be aware of who are planning to take a mortgage out anytime soon or or looking to renew. Actually, there's probably two separate questions there. Let's look at taking a mortgage out soon and then let's look at dentists who want to renew what they should be conscious of.
Sarah:Okay.
Sarah:So new mortgages? Well, that depends on your income. Have you got even one year's accounts? Because we can do three months pay schedules If you, if you have got, if you have got an account or a tax return done well, well then you know there's a few more lender options, but we might not be able to get you what you want. So then we can always revert back to the three months pay schedules. Um, two years accounts, um, you know that that's. You pretty much go to any lender.
Sarah:However, if you're a limited company and you're doing keeping your your tax tax nice and tax efficient and keeping yourselves within the 20 tax banding, and say you know, typical, you've got a couple, husband and wife, both drawing 50k in salary and dividends, yet the profit might be, let's say, 200k. You know I have got lenders that will work on the 200k rather than the 50k each for husband and wife, so you can get some very different figures there. So you know, always speak to somebody that understands the self-employed market, but you know, ideally dentists, because we do have options with three months pay schedules, which there's. You know a lot of lenders won't do that with recent self-employed and that sort of thing. Um, so that's really the the.
Sarah:You know somebody buying also the the one thing is is, whether you're buying or or you're remortgaging and you've got a mortgage offer out, I would say, please make sure, because we're in a falling fixed rate market. If you fixed a rate, keep get your mortgage broker. Or if you've done it directly, keep on checking the rates or get your broker to check the rates.
Sarah:That's something that we do um for our clients is uh, when, when rates are falling and let's say, for instance, we're with halifax and halifax are launching some new rates tomorrow, we will look at all of the clients that we've got mortgage offers out with Halifax and we'll switch you to the lower rate and there can be some massive savings by doing that. Like you know, we've had clients where we've saved like £500 a month on their mortgage payments.
Dr James:That's a fair whack. That's a lot, because that's post-tax as well. That's like £800 gross or maybe more, you know potentially.
Sarah:Exactly. So that's it, remortgage, I would you know. If clients come to us, we always compare their existing lender what their rates are offering. You know their existing lender, what rates are on offer with them, before comparing it with the market. Um, it might be that you can get a better rate with another lender, but be aware of of any fees like solicitors costs and and that sort of thing. It can be quite often more expensive to to move. You know the setup costs to move lenders, but then obviously you might, might save by having a better rate.
Sarah:So you know, um, we can, we can do that and I, I would assume that most mortgage brokers would also do that, would you know? That's that's what our governing body tell us to do. So you know, um, so yeah, most brokers would do that. Um, and make sure whole of market, you know, no, no restrictions on which lenders you can go to. If you are looking for a broker, that's what I would recommend. But, you know, ideally done somebody with a bit of dental knowledge, but if not dental, certainly self-employed do you know what?
Dr James:just on that, I remember once upon a time we're going back like seven, eight years now I went to an unnamed large high street bank and I inquired could I have a mortgage? Or was it when? When was it viable for me to have a mortgage? And when we sat down and we talked, they were like oh, you're self-employed, we need two years of accounts before we even talk to you. And do you know what? I did right? And I can't believe I did this. I just thought, I just said, I think I just thought to myself. I said to myself okay, fair enough, then it just didn't question it whatsoever. And then I, uh, what did I do?
Dr James:I basically just went about my life for about two years and then by that, by that time, a few things had changed for me in terms of my situation. What have you? You? And actually a mortgage wasn't no longer on the card. So, hey, do you know what? For me it didn't really work out too badly after all. But let's say I did want to go down the path of getting a house, which probably about 98 of people in my situation would have done at that stage. I would have had to wait for a long time, which I just didn't need to. So it's really worth getting a second opinion and you think that big brands and high street brands know their stuff and are really accommodating when it comes to these things, and actually not always the case.
Sarah:No, you know, I find that, of the very large lenders that you know, high street names that a lot of people will know they're probably the worst at self-employed. But if you think about it, you know they're large, so they can be picky and choosy and quite often they have the best rates available. And so you know, if they're only after between 10% and 15% of the market, well, why not have somebody with pay, three pay slips and a p60? Why make it complicated by, you know, lending to somebody with accounts? Because that's you know, you're going to have to train all of your staff so much more okay, yeah, we see the logic.
Dr James:We see the logic. However, what we have to understand and decide is does that work for us? Are you with me, as dentists who are, who are in that? No, absolutely, how can we get the best deal? But you're right, I see that, I see their logic and, uh, that is, uh, what you just articulated is helpful to know for dentists. So I'm curious to know, let's say, in the situation where somebody does have three months accounts and let's delve into that in a little bit more detail let's say that somebody has three months accounts, how would their interest rate be affected, uh, versus somebody who is pretty much exactly the same situation, but they had a few more years accounts under the belt? Am I right in saying that they get a lower interest rate?
Sarah:does that go. Yeah, typically yes, but but you're probably only looking at if you, if we're going on three months pay schedules, you're probably looking at probably somewhere in the region of about half a percent. So obviously half a percent on a million pound lending is, you know, is a bit. But if you're borrowing sort of you know three, four hundred thousand, which is possibly, you know that sort of your first time buyer well, unless you live in London but you know the rest of the country three, four hundred thousand borrowing um is probably about average, I find for dentists, you know it's, it's not, it's not a great, it's not a great deal well, particularly if it can accelerate things by two years.
Dr James:Yes, that's a fair amount of time. And do they? Do they ever go? I might be. I might be about to say something that is just a bit silly. To be frank with you, Sarah, but do they ever go off projected earnings, like if they said hey, we've got this new associate, they're earning 60 grand out of university? However, by this statistical modeling and by this data, because of the circumstances that they're in and who they are and all the rest, they're projected to earn this much in a few years. Therefore, we're a little bit more lenient whenever it comes to the lending side of things. Does?
Sarah:that happen or not, so much Projections. There's not really many lenders that will go off accountants' projections, and if they, are.
Sarah:The rates are quite high because they'll be your small sort of building societies that will take a punt on that. What we do have is three months pay schedules. So you know, if you've got I've got quite a lot of clients that sort of perhaps you know they're perhaps four years in they've been spending a lot of money on courses, which so their profits have been sort of artificially low because they've had the cost of the courses and then they've also not worked as much because they've been doing studying and then you know. So I've had one recently where the sort of tax return profit showed 60K, whereas they're now doing loads of private taking sort of 15k a month as an associate, and that was over three practices. So we got three months pay schedule from each of those practices. You're looking at 180k worth of income that we're using as their income.
Dr James:So it went off the turnover per se.
Sarah:Yes, yes, the turnover on their pay schedule. So you know 60k versus 180, you know that's massive.
Dr James:That is a huge difference, and I didn't actually know that was possible, because I know you were very careful to use the word profit earlier. But it's good to know that turnover comes into play as well, because in dentistry, as we all know, when you prioritize investing yourself, that's one of the most lucrative ways to generate more cash flow, in my opinion. So you definitely want to do that asap at the start of your career. That's the hack that I wish I had at the start of my career. So I'm appealing to any of the young guns in the audience, or any of the not so young guns as well it's never too late. You can get on the bandwagon. It's out there, it happens.
Sarah:Awesome, we're always learning.
Dr James:We should be eternal students is my posit Sarah? It's my posit Sarah. We've just got about. Let me just see. Ooh, we've covered, no, how about this, any interesting cases that you've had recently and like anecdotal, almost like this person had this set up obviously all anonymized, of course. Yes, this person had this set up and they didn't think it was possible. But we tweaked this and we used this, this, and then eventually it happened. We got them a mortgage, something along those lines. Those feel good stories are quite good. I like those.
Sarah:OK, so we did have a client who was actually came from one of the first podcasts that we did. Oh, wow. He was driving home, listened to the podcast, contacted us the following day and he was in the situation where he was very profitable, his business, but he'd had massive growth. So every year the profits were sort of increasing quite considerably.
Sarah:But he didn't take all of those profits out of the limited company, only took about 90k a year and we had a lender that took the average of his last two years, not profit after corporation tax, profit before corporation tax, which that's obviously another 20, 24% or whatever percent, or, or, or whatever um and uh, and so uh, yeah, he's, he literally um, has only just completed very recently on on his very new, nice new home.
Dr James:Oh, wow, there we are. So it's some anecdotal, you know, in the flesh evidence that actually this stuff can come through for people. Yes, and he didn't think that he could. This house that he'd found, uh, with regards to educating ourselves and listening to content on finance, finance, cause you never quite know what you're going to hear on something.
Dr James:And you don't know, and that too, and you don't know what you don't know. So it's very powerful to listen to content and listen to a podcast or videos or whatever. Uh, that maybe you don't fully know what you're going to find out and learn, but you're there with a curious mind to explore, because who knows what you're going to find? Because this is the thing if you go into every situation and we're like, right, I'm looking precisely for this, then you're going to find it, but it's kind of going to reaffirm what you know already to a degree. So there should be that little bit of variety in there as well. Yeah, yeah, no, absolutely Lovely, jo Lee. Well, listen, Sarah, you and I can probably freestyle for a little bit more, but we should probably kind of consider it to the audience and throw the mic out to the floor, because you and I are both pretty good at chatting and we can definitely do more of that if there's not any questions. But I'd like to be considerate to the audience that's come along this evening. Guys, if anybody would like, where you just now is a brilliant opportunity to ask Sarah, because this is Sarah's specific area of expertise whenever it comes to mortgages for dentists. So feel free anybody to jump on questions in the chat or, if you're brave, jump on the camera. That is cool too.
Dr James:We got a face on the camera. Did someone just jump on there? Oh, maybe not. Okay guys, anybody got any questions?
Haydn:hi, uh, I've got a question absolutely Haydn, is that right?
Dr James:I've got a pleasure to meet you.
Haydn:He's trying to join at the beginning, so I think I joined quite late oh, it's okay.
Dr James:Well, even if we're recovering or growing, that's fine as well. I'm sure we can make it specific uh to yourself as well, based on.
Haydn:Would the recording be made available afterwards or it?
Dr James:it will, it will. However, it'll take a few weeks to process. So, yeah, feel free.
Haydn:If there's anything you'd like to ask right now, it's totally cool yeah, so I'm a dentist, I'm an associate, I started in november 2022, um, so I'm on about between five and six a month between two practices grossing.
Haydn:I'm about to purchase, so I live in my own property, I have a shared ownership in 25 and I'm paying a mortgage on that. There's another property that I want to buy as a buy to let. I've got two offers now as an SPV or as a personal buy to let. Now the SPV is asking for £160,000 deposit and £1,350 interest repayments per month, and the personal buy to let with my bank it's £1,100 interest per month and a £90,000 mortgage deposit Okay, uh. With my bank, it's 1,100 interest per month and a 90,000 mortgage deposit, okay, okay. I was very much keen to do it as an SPV initially, just because of the tax benefits, but I'm thinking I mean just a rough ball estimate I think it's probably more wise to go with a personal buy to let in this instance and leave the SPV for another purchase in the future okay, okay uh have you?
Sarah:have you also taken uh tax advice as well?
Haydn:I haven't managed to, no, unfortunately. I mean I have got tax advice of friends that are accountants, but I haven't got formal sort of tax advice.
Sarah:Because the thing is for buy to let. It doesn't really matter what your earnings are, because there's several lenders that you know. A lot of lenders will say that they need to have a minimum income of 25k, but as long as you're earning 25k, it doesn't matter whether it's more so. So, but my concern would be is if you're expecting your income to go up and and you're getting closer to the 100k sort of the golden threshold of of you, which you don't ideally want to go over because you lose your personal allowance if I go over 100 and I have a lot of expenses, would that still count or does that with expenses?
Sarah:yeah, but the problem, the problem is is if the vital letters in your personal name it don't the, the, the, uh, the gross rental is added to your earnings before, before any deductions are taken off, so it can, it can really mess up. Yeah, yeah, you're, you're so. So, um, yeah, you know, I, I would like. Obviously, spv rates are normally a little bit higher than owning the buy to live.
Haydn:I mean, I'm paying £250 extra on the SPV every month and I've got to put a £60,000 extra deposit, which I don't really. I have to still find a shortfall of, I think, £15,000 or £10,000 shortfall.
Sarah:Oh, sorry, I misunderstood. I thought you could borrow £160.
Haydn:No, no. So I need to put a deposit of 160 as opposed to 90 on the personal that doesn't really make sense to me, it doesn't at all.
Sarah:It doesn't at all because normally you can borrow more in the spv, because um yeah, it's with kensington, and I think they're very, very um yes, well, kensington, their affordability on the spv is not is not as good no there are other other lenders. Where are you taking a five-year fixed? That's correct, yeah yeah, so so you can get better loan amounts um by they stress it um much more harsher than other other um buy to let the only reason I went with them was because I have a very high service charge with this department.
Haydn:I think it's five, six hundred pounds a month okay we were the only ones, I would sort of consider that sort of scenario, because it's got a private security team, it's got a 24-hour security team, rather yeah yeah, it's quite, it's quite luxurious. But they I mean even their survey wasn't of the opinion that it was very luxurious and he's given a very different valuation.
Sarah:So yeah, so that that could be your challenge, that that might, um, that might affect. Yeah, it's.
Sarah:It's the sort of typical caveat of subject to subject to surveyor's comments and the only way to find out is by submitting an application, which is very frustrating for all partners yeah but there are, there are some lenders where you can actually do a pre prequel um and they, they, they sort of send the details to their surveyors so that you can you can find out beforehand whether the surveyor is going to have an issue with it I mean I think I'm, because it's been going on since february.
Haydn:I'm just. I'm at the stage where I'm thinking, well, I might as well take the hit, do it as a personal buy, to let uh, and I'm still young in my career, so whatever extra tax it deducts, it's fine, because I'm paying. I mean just in terms of cash flow. I'm paying less, 250, 250 pounds less a month and I'm saving 60 000 in deposit and I can use that towards purchasing a clinic or any other sort of yeah, yeah, I get your point there.
Sarah:I assume that the rent's quite high on that 1,700.
Haydn:Well, I'm going to be renting it for quite low at the beginning because I've got a secure tenant that lives there. It is worth 2,700, but I'm going to be renting it a bit lower than that, okay 1,700.
Sarah:So that'll add 20K.
Haydn:Which is not a lot, and then this charge of 500 pounds.
Sarah:So if you take 6k off, that the thing is is if you were let's, let's say you're earning- 90k yeah, 20k is added to your 90k earnings with service charge yeah, they'll ignore the service charge before they start taking the deductions off right so I I would, I would speak to an accountant tax specialist before you make your final decision okay, thank you so much no, you're welcome and is there a specialist you recommend?
Haydn:is that specialist that you recommend I speak to? Is it a dentist specialist or a property specialist, or have you got a tax specialist?
Sarah:James on the group do you know what?
Dr James:there is a chap that I really like. I'm not sure if his area is necessarily in the property side of things, but he does know dentistry extremely well hidden. So if you're happy, we can connect after this and talk a little bit, and I can send him your details if you wish yeah, that'd be great.
Haydn:Thank you so much listen.
Dr James:thank you so much for answering, for asking that question, because there was layers to it and and I'm sure the rest of the audience will have benefited from that and the expertise on display there. So, thank you, I'm glad that we could help this evening as well.
Haydn:Thank you very much. It was a pleasure listening to you guys.
Dr James:You're welcome.
Haydn:Thank you so much, mate I think someone wants to ask a question as well on the chat.
Dr James:Oh, yes, so thanks for pointing that out. Yeah, you're absolutely right point that out. Yeah, you're absolutely right. Yeah, we've got a few coming in here.
Dr James:Uh, yeah, we'll, we'll go into those, thank you so much hidden, speak soon thank you very much, thank you all right, we got, we got two questions here, so I've had one sent to me personally. And then I see that, uh, mr ahmed has asked one in the chat. Can I ask one please? You absolutely can, ahmed. Uh, there's one that just I think uh, there's. I'm to presume this person wants to remain anonymous because they've sent me a question just before Ahmed has. So Ahmed will definitely come to you right after this, mate. But the very first question right here is I'm going to presume this person wants to remain anonymous as a direct message, unless they tell me otherwise, and they've said when is the right time to go for a second home now? Pretty broad question, Sarah, but maybe you can offer some high level wisdom second home.
Sarah:So I presume that this is actually a second home and not a buy to let. So, um, when's the best time? Oh gosh, yeah, uh, crystal ball time, isn't it by by? You know, everybody wants to buy when the market's low and sell when the market's high.
Sarah:You know I would say, second home it's obviously an additional commitment and typically second homes you don't rent out, so it is just you know, straight off your income that that money is going to come out. So I would say, get your own residential, get your sort of dream home, your forever home, first, and then, once you've got that, look at buying your second home then, unless, of course you know I've got some clients that they lived in Birmingham but they worked in London and so they wanted to have a second home in.
Sarah:London, so that they didn't have, you know, accommodation costs when they were working in London and then come home at weekends. So if it's that sort of scenario, well, that's slightly different.
Dr James:Gotcha. Thank you for that wisdom just then, Sarah, and you know, you know what that anonymous person. They've just revealed their identity. It was Zareen. I was just I was, I was dancing. I was kind of walking on eggshells there because I wasn't sure if you wanted to remain anonymous, zerreen, because it was a private message, of course. But yeah, good to clear that one up. Zareen, are you happy with that answer or anything more than you need from us this evening? Does that help? I'll presume that's a yes. I'll presume that's a yes for the moment, unless Zareen tells us otherwise in the chat. But listen, , thank you so much. That's perfect.
Sarah:Bye, bye, Zareen, nice to meet you as a client.
Dr James:Oh yes, because Zerreen was who you helped, wasn't it? Yes, back in the day she even got her first house, and now she's looking for a second house. It's a success story. There we go, magic, all right, cool. So we did promise we'd come to Mr Abusawel next, so let's do just that. Ahmewd, would you like to jump on camera?
Ahmewd:I'm trying, James, but it's not allowing me. It says the host of the videos.
Dr James:Oh, I can't think why. I tell you what cherry, if you can. Oh, hello, there you go. Okay, it worked, it worked, we got you. How are you, my friend?
Ahmewd:I'm very good. Thank you, James. Thank you, Sarah, for your nice presentation. It's very informative. Oh, great time giving us some of your afternoon.
Dr James:Thank you very much hey, glad, glad you enjoyed me, glad you enjoyed yeah, I got a question.
Ahmewd:Um, I used to live in a house in birmingham. Then I left and I was about to sell it. And I'm still trying to sell the house. But I'm just looking for something to finish near to the house. So I'm renting it out, but the interest obviously in the house it comes from my own expense. It's not like a tax deductible, so I don't know. Before I sell the house which is I'm waiting till December there's a project next to us like a big station next to us. I'm waiting for that to finish to increase the value before I sell that.
Ahmewd:Yeah, so that's my only property which I'm renting it out temporarily till the value increase. But for the last two years it's just, um, the whole rent goes to as an income. So I pay 45 on the rent itself, which then I'm losing when I pay the mortgage. Uh, I'm like a 300 pound negative, like minus. It's like, yeah, I sell it and I wait, because this is why I'm looking at capital gain tax versus losing money. So it's a loss-loss in either way. So I don't know how to do that efficiently.
Sarah:So was this your ex-main residence? Yes, and how long ago was this that you moved from there?
Ahmewd:Nearly about three years now, three years.
Sarah:So you can. It's called something else now. So this is more of a tax accountancy sort of question. So I would speak, I assume that you have an accountant.
Ahmewd:I do have one, yes.
Sarah:Yes, yeah, so you do get. It's called something different, but it used to be called taper relief. So for the first 18 months after you've left your property, you don't pay any capital gains tax on that element. And then it sort of tapers beyond the 18 months after it ceased becoming your main residence. So and there is obviously the time that it was your main residence as well, that that you don't, um, don't sort of pay tax. So there is a calculation, um, which you have to work out how many months you've actually owned the property, how many months it was your own, and then how many months it's it's uh, sort of being let out and then, and then you know you pay, you do pay capital gains tax potentially, uh, but, um, but it is a, it is a reduced amount and it will take an account for it being your main residence at some point thank you, thank you very much that's okay, that's cool, and listen.
Dr James:Thank you for your question, Ahmewd. There's some real uh questions with death coming up this evening, some juicy ones to get our teeth stuck into. So we speak. So thank you. Thank you, Sarah, for uh, uh, divulging, uh what you just shared and, like I say, the audience will be able to look on and garner a little piece of wisdom for themselves. They can pull out of that. So thanks to everybody for participating. Okay, cool. So thank you, amir once more. We've probably got time for, I would say, one to two more questions. If anybody wants to get a question in for the final whistle, I just noticed that there's one here in the chat, uh, so if anybody has any more after that there's still a vacancy, uh, and we can go ahead and give you the opportunity to ask.
Dr James:So, uh, Abdullah has one. Okay, cool, listen, I tell you what. We can probably squeeze maybe two, three more in. If everybody, if anybody wants to ask any questions, feel free to pop them in a chat. We can definitely get to you before the evening's over. We'll make a point of it. So before we do that or we'll actually rather to kick off those questions rather, uh, we've got dr tawasil Towersill. I want to buy a house for the first time. What are the steps that I need to follow and how do I contact for advice? Do I need to have any money in the bank or saved up to start?
Sarah:Yeah, so, hi. By the way, Ideally you do need to have a deposit. We can, so it depends on the situation. If we're looking at pay schedules rather than actual tax returns or accounts, well then we've got a very limited amount of lenders then, but we can go with a 5% deposit, but we can go with a 5% deposit.
Sarah:Now that 5% deposit can be their own savings or it can be a gift. Bank of Mum and Dad is a popular source for deposits at the moment and has been for a long long time. So, yes, you know, 5% deposit you can, but I always say this if you can stretch to a 10%, the difference in rates is massive. You know you're looking at a rate starting with a six, with a five at pay schedules, so you know 6.2, something like that is what we're looking at, Whereas 10% deposit, you know we're looking at much lower, around the sort of five and a half mark.
Dr James:Thank you, Sarah. I hope that helps. Dr Towersville, please do let us know if you need any more information on that front. And to answer your other question, yeah, Sarah is contactable. Off the back of this webinar we should hopefully be sharing a link tonight that you can use to register your details with Sarah, or register your details that will be sent off to Sarah and then Sarah can get in touch if anybody is interested. We'll be sharing that in the chat before the evening's over. Okay, we've got some questions coming in. Uh, okay, dr tawasula said thanks, you most welcome, dr tawasula, so we help. Wonderful, wonderful. Okay, abdullah's got a question and then juvie's got a question and zareen's popped into a question, and I'm a big softy, so I guess we're gonna have to do all of them, but then we we really gotta put a hard limit on uh after these three. But that's fine. Okay, we're here to help this evening. Anyway, abdullah's got a question. Abdullah, do you want to jump on the camera?
Abdullah:um, yeah, I can do. I need a trim. But it's all right, I'll jump on that means two of us it's all good.
Abdullah:Hi Sarah, hi James. First of all, I appreciate you jumping on and obviously giving your insight on this topic. Appreciate it, first of all. Secondly, my question may lead to other questions, but basically I'm in a position where I'm going to potentially be looking to buy my first home.
Abdullah:The only issue I have at the moment is that while I was studying, I had a property on my name. Now that property is no longer on my name and my missus has had a property on her name and, as you mentioned before, I'm a typical like a set of a limited company. Uh, I pay myself to my missus a typical 50, 50 um. And my main concern is well, there's sort of two things. First of all, obviously is a lifetime isa. Obviously because I can only use it as a first-time property buyer or as a sort of pension, like like a second pension, but it's more of a property sort of thing I'm looking at. I can't use that because I've already had a property of my name but my missus can't. So first thing is, is there any point in me putting money into my, into a lifetime isa on my missus name? And if we were to buy our first property and if we would buy it as a joint income and have our both names on it. Could I, could I use that lifetime isa on that property?
Sarah:so I'm not a hundred percent sure on the on the ice rules because basically, are you, are you legally married in in like british law? I know I don't think so no, no, well, that's good, you're still single, abdullah, you're still single.
Dr James:Yeah, basically.
Sarah:Don't get married before doing a house. So the thing is is, if you were legally married and you're recognised by British law because you've owned a property, you wouldn't be classed as a first-time buyer. And because you're not, your wife isn't, so you lose that benefit. However, what we can do which I've done for quite a few clients in your situation is we can do what's called a joint borrower sole proprietor mortgage. So this is where you are both on the mortgage, so we're using both of your incomes, but only your wife is on the deeds, so she she basically owns the property, right? Um, so you're going to have to be nice to her.
Sarah:Yes, don't get divorced Wow right and then at a later date you could add your name to the deeds.
Abdullah:Potentially there might be a stamp duty liability, but what sort of mortgage would you be looking at it be below half a million, 500k yeah, I don't see myself, even though I probably could go for that much, but I'd rather keep it below that.
Sarah:Yeah, so if it's below that there'd be no stamp duty to pay by adding you, so it's a really good way of getting around the stamp duty right, okay, fair enough.
Abdullah:And then what? And then, in terms of lifetime, I said you don't know about that if I a lifetime.
Sarah:I said it'd be no good for you because you're not actually on the mortgage, on on the property, on the title deed. Sorry, you will be on the mortgage so.
Abdullah:So you're not buying a house, it will only be your wife so it's worth putting in her name, setting my life and I said using that on her name for now. Ah, perfect, okay. And then in terms of, uh, just one more question. And then in terms of saving up a deposit, in my head I'm looking at around a property for about 350 to 450. That's where I'm looking at now. Um, how much in my in my head I'm thinking that the more to deposit I save, the better it will be long term. So my concept is if I save up for another year or two, it will save me in the long run of getting a longer mortgage. So, in terms of a deposit, I'm thinking 100, 150,. If I can save that much up and put that all down to a house, is that a good way of doing it? Or, as James might say, put less to deposit and invest the rest somewhere else? I don't know.
Sarah:Yeah, the thing is is with deposits, on the interest rate, 10% is definitely key, but between 10%, 15%, 20% and 25%, and then the next sort of thresholds, 40%, there is a bit of difference, but not as much difference as what there was like sort of two years ago or something. So I think probably it would be best to sort of see your scenario what lenders are going to be available if we're going to be doing the joint borrower, sole proprietor, and then using your accounts, we're sort of filtering out a lot of lenders. It will be then to look at, when we've sort of got the lenders available, what, what deposit thresholds, but I would say probably no more than 10 percent.
Sarah:A 20, 25 is going to really make much of a difference so if you've got a 25 deposit, um, you know, uh, it depends on on your attitude to risk.
Sarah:But you know, if you're, if you've got 100, 150k and you make that your deposit and then borrow the other 75, you can buy, you can move, save your next move.
Sarah:You know, because a lot of people will say, oh well, I'm going to start off with this house and then I'm going to move and then eventually I'm over, going to my dream home. If you can take out one of those transactions, because every time you sell you've got a state agency costs, which is typically one 2%. So if you're looking at a 400K value, you're going to be spending, you know, paying between four and 8 and eight thousand on estate agents to sell your property. You've got your legal costs and, more importantly, you've got your stamp duty all again. And if you go up the market, that stamp duty gets more and more and more so. So if you could take out one of those purchases and buy in bigger now so that then you know your future purchase, you're only doing one rather than two or or more, that that that will, that will save you much more money in the long run ah, perfect, you've actually answered a question which I've been thinking, but you've actually taken out my brain and answered it for me.
Abdullah:That was another thing, because I did think should we move on small first, if we, but then, madame, like, let's wait another year, save up more and just move, and if they're happy with it, just stay in one place instead of moving around? So you've answered the question there as well. No, I appreciate it. You've answered all my questions. I respond. I think I'll come back to you when I'm ready. Yes, definitely, I look forward to it no problem, I will do OK I appreciate it.
Sarah:Thank you so much, Pleasure man.
Dr James:Thank you, all right, wonderful. So we got two more questions. I think we've got time for these two more questions we should do because you want to give max value this evening. Just worth mentioning that if anybody does want to connect with Sarah, there's a link in the chat that you can use to send your details off. Sarah will get in touch with you. Feel free to do that. Should that be something?
Dr James:People who are watching this video on catch up on the dentistswhoinvest. com website if you head right over to the videos tab and hit that button, you should be able to see this webinar appear at some stage over the next week or two. Again, if you're watching this video on catch up, there'll be a banner just below this video you can use to connect with Sarah, should you so wish. Anything and everything mortgages is Sarah area of expertise, so that's certainly helpful to run by her. Should you guys wish to connect, or should any dentists out there wish to talk to Sarah? Okay, cool, so let's just see what we have here. So we've got a question from Juby. Uh, juby has said Dr Juby has said I'm due to remortgage in November. How late can I leave it to know best interest rates, and should I go for a three-year mortgage, hoping interest rates will dip?
Sarah:yeah, or like three year there's. There's not very many lenders that offer three year, that lenders tend to offer two and five year, which I assume is fixed rates that she's looking at. So, yeah, like you know, the difference, the margin between a two-year and a five-year has really reduced, which is great. So I think that possibly if you can get a two-year, starting with something like a four, I would possibly if I was luckily I've got two years before my rates up but I think I would possibly be going with the two-year deal now because I think that in two years' time rates will be better. You know all the indicators are the economy looks to be sort of stable, inflation's very low. You know we look to be in a good sort of state going forward. So hopefully the blip of the last two years is sort of uh, we're moving away from that good stuff, jimmy.
Dr James:Please do let us know if that helped.
Sarah:Uh, when it comes to your question, yeah, also with regards of when to secure it, I would secure right, I would secure a rate now. We're securing our clients rates for for November end dates now, because we keep an eye on those rates. So if they do fall, we you know we get a better rate for them. We switch it, we switch it to the lower rate. But more importantly, you know, if we go back to sort of February last year rates plateaued in February. Nobody knew that they'd plateaued and then they started to increase. So if you leave it right up until February, you're stuck with what is available in February, whereas if you do something now, you don't have to, you don't have to complete with that, but at least you've secured something. So if God forbid, something did happen like you know how many, how many lifetime events have we had in the in the last, uh, sort of 15 years?
Dr James:years, man, I'm so past that I think. I think we're due a quiet period now. A lot of averages, but of course, famous last words. Eh, famous last words. Anyway, sorry to interject yes, yeah, yeah, yeah.
Sarah:So you know, always secure you can cancel. You know, if you're going back to your existing lender and you've secured a rate, you can always cancel your secured rate right up until, I would say, a couple of weeks before your rate's due to go into force.
Dr James:Good to know, and Juby has just said thanks in the comments section, so it looks like you've helped there, Sarah. So thank just said thanks in the comment section, so it looks like you've helped there, Sarah. So thank you once again for sharing your knowledge. One final question we've come full circle, because we started with Zareen and now it looks like we're going to conclude with Zareen as well. A question from Zareen. Zareen said me again how much for oops, if I can just yeah, that's right.
Sarah:How much for an initial deposit on a second home yeah, so you can get away with 10 percent, uh, 10 percent for a second home. So, yeah, that, that is that is possible good stuff, good to know.
Dr James:Nice succinct answer. Zareen, please let us know if that was what you were after. Zareen said thanks so much. Guys appreciate the value again hey the indication is extended.
Dr James:You guys should reconnect. Yeah, you guys should reconnect. It's been too long anyway, okay, cool. Well, listen guys. Thank you so much for coming along this evening. We also want to take two seconds just to thank Sarah for giving up her free time on this wonderful sunny day. Uh, according to the, uh, how can we say the weather that I can see behind you, Sarah, unless it's cloudy, it could just be the glare, I don't know. It looks sunny no it Unless.
Sarah:it's cloudy, it could just be the glare, I don't know. It looks sunny. No it is. It is wall-to-wall blue skies. Well there's a few fluffy clouds, but I think it's about 30 degrees.
Dr James:You're a lucky lady. G&t time by the sounds of it, then G&T time after putting in a shift today.
Sarah:Well, listen, Sarah. Thank you very much.
Dr James:Everybody's going to clap and cheer up for Common Logs TV. I'm going to clap the audience up as well, yes, and thank you, the audience. Thank you, guys, so much for coming along to a wonderful, information-packed evening, as they always are on these webinar at Dentists Who Invest. We run these every two weeks about anything and everything finance. We've got a really cool, an extra cool one coming up next week. It's all about planning pensions and understanding how to get the most out of your pension, so one to look out for. As I say, we run them every two weeks in the Dentists who Invest Facebook group. Feel free to join the mailing list where you will receive newsletters, where we give you updates on everything that happens on that front.
Dr James:Or, if you want to watch this video on catch up, if you're listening to this on the podcast, feel free to watch it on dentistswhoinvest. com, on the video section. You can see the visuals and all the things that we talked about today. You can see Sarah and I interact and engage in our beautiful faces. All of that how good can it get for you lucky people who are out there in the audience tonight? Guys, thank you so much. Once again, Sarah, thank you so much for coming along, and I'm looking forward to our next podcast and our next video already. 'm sure that'll happen very soon yeah, absolutely.
Sarah:Thank you, James wonderful.
Dr James:All right, we're going to go ahead and wrap up around about there. Everybody hope everybody has a lovely evening wherever you are in the world, and we shall see each other again very, very soon. Bye-bye bye-bye.
