BTL mortgages?

[GavC88]

Hey all,

I'm looking at trying to get on the property market.. but maybe in a slightly different way to the norm.

I live with my partner one of her parents houses. We do pay rent, but lower than what we would if it was a standard private rental. I earn about £31,000 a year, she's on about £19,000 (but with about £800 extra a month in bonuses)

We are looking at buying a small property to rent out, not live in.

Say the property costs about £180,000 and we can get a deposit of about £22,000 or so ( + about £750 extra a month whilst we look for a property )

That kind of property would be rented out for maybe £850 a month.

We are happy to stump up some extra cash monthly to cover the mortgage if required.

Very early in the stages of looking into this so just looking for general information really.

Is this possible, broadly speaking?

Thanks

[Sarnie]

Broadly speaking, no

[Sir Bagalot]

That's a LTV of just shy of 88%.

You really need 80% LTV and even then you won't be getting the 'good' deals. Best to save another £14K and then ask again.

[BoRED S2upid]

Sir Bagalot said:

That's a LTV of just shy of 88%.

You really need 80% LTV and even then you won't be getting the 'good' deals. Best to save another £14K and then ask again.

Or buy a cheaper house.

[GavC88]

BoRED S2upid said:

Sir Bagalot said:

That's a LTV of just shy of 88%.

You really need 80% LTV and even then you won't be getting the 'good' deals. Best to save another £14K and then ask again.

Or buy a cheaper house.

Ok thanks for the indications.

Unfortunately that is. 1 bed cluster type home, and they don't get much smaller!

I'll try to formulate another plan

[Sarnie]

GavC88 said:

Ok thanks for the indications.

Unfortunately that is. 1 bed cluster type home, and they don't get much smaller!

I'll try to formulate another plan

You also need to consider that you will not only be a First Time Buyer you will also be a First Time Landlord. Both of which will severely reduces the number of lenders who will lend to you.

Why wouldn't you just buy your own house?

[GavC88]

Sarnie said:

GavC88 said:

Ok thanks for the indications.

Unfortunately that is. 1 bed cluster type home, and they don't get much smaller!

I'll try to formulate another plan

You also need to consider that you will not only be a First Time Buyer you will also be a First Time Landlord. Both of which will severely reduces the number of lenders who will lend to you.

Why wouldn't you just buy your own house?

Because we are renting a property for an amazing rate, and we would have to massively downsize what we have now to buy a house, which we don't want to do!

Thanks for the info, looks like we will have to dream on!!

[otherman]

So really you're looking for somewhere to get a decent return in savings? Is that what kicked the idea off?

[Sarnie]

GavC88 said:

Because we are renting a property for an amazing rate, and we would have to massively downsize what we have now to buy a house, which we don't want to do!

Thanks for the info, looks like we will have to dream on!!

So are you just going to rent forever? Even an amazing rate is still dead money imo.

[GavC88]

Sarnie said:

GavC88 said:

Because we are renting a property for an amazing rate, and we would have to massively downsize what we have now to buy a house, which we don't want to do!

Thanks for the info, looks like we will have to dream on!!

So are you just going to rent forever? Even an amazing rate is still dead money imo.

Still in early days and sorry for the delay in replying.

Ultimately, the house we rent currently will become ours.

We wanted a property that we can rent out to get a return on, but looks like we will have to work on this some more!

[big_boz]

Why can you not look further a field than the local radius i assume you have put on your current search criteria. I assume that you would be putting this with a letting agent to manage for you so you don't need to be really close to the property. As such you can then look to get something cheaper to start you off.

Just as an example a 1 bed house where i live, that being West Yorkshire, 1/2 a mile from a train station putting you 20 minutes from Leeds city center, 30 mins from Manchester or 5 mins from Bradford will Rent for c £350-400 a month so long as it is in a decent state of repair.

There are a few locally for just shy of £50k, that probably want about £5-10k spending on them to make them renatble, Say £60k all in to have a very respectable little house, possibly a 2 bed.

You could buy buy one, get it rented out, the poor rate you will get for being 1st time/buyer/renter is less important as you will only be borrowing c£45k and your monthly payments will be bugger all.

Then a few years down the line, you can get another and get better rates, possibly more local to you.

You get the idea. As Bruce Lee said:-

"It is like a finger pointing away to the moon.
Don't concentrate on the finger or you will miss all that heavenly glory"

[GavC88]

big_boz said:

Why can you not look further a field than the local radius i assume you have put on your current search criteria. I assume that you would be putting this with a letting agent to manage for you so you don't need to be really close to the property. As such you can then look to get something cheaper to start you off.

Just as an example a 1 bed house where i live, that being West Yorkshire, 1/2 a mile from a train station putting you 20 minutes from Leeds city center, 30 mins from Manchester or 5 mins from Bradford will Rent for c £350-400 a month so long as it is in a decent state of repair.

There are a few locally for just shy of £50k, that probably want about £5-10k spending on them to make them renatble, Say £60k all in to have a very respectable little house, possibly a 2 bed.

You could buy buy one, get it rented out, the poor rate you will get for being 1st time/buyer/renter is less important as you will only be borrowing c£45k and your monthly payments will be bugger all.

Then a few years down the line, you can get another and get better rates, possibly more local to you.

You get the idea. As Bruce Lee said:-

"It is like a finger pointing away to the moon.
Don't concentrate on the finger or you will miss all that heavenly glory"

Thats really useful BB. I dont know why but havent really looked that farna field!

I'll give it a good look!

[russ_a]

What about a holiday let? From what I understand the tax position is better than a residential buy-to-let.

[thekingisdead]

russ_a said:

What about a holiday let? From what I understand the tax position is better than a residential buy-to-let.

Securing a BTL mortgage on a holiday let property is a lot harder than on a standard STA rental contract

[Gareth79]

GavC88 said:

Still in early days and sorry for the delay in replying.

Ultimately, the house we rent currently will become ours.

We wanted a property that we can rent out to get a return on, but looks like we will have to work on this some more!

Can you buy a place and rent out the current place at market rate? I can imagine many reasons why that might not be possible though.

[Sarnie]

Gareth79 said:

Can you buy a place and rent out the current place at market rate? I can imagine many reasons why that might not be possible though.

I can only assume from the OP stating that his amazing deal and that it will one day be his, that its being rented to him by a family member (grandparent maybe?) at reduced rates who probably wouldnt be best pleased with the OP subletting it and making a profit to fund his own purchase!