Renting out a flat whilst living with parents
Discussion
Hi,
I'm potentially about to pull the trigger on buying my first property. It's a 1 bed flat which is very near to what will become a Crossrail station in 4/5 years time so could potentially be a great investment.
My plan is to move on to a larger place with a garden etc in 3/4 years time, however in view of the fact that the flat should be very easy to let out due to the proximity to the station and that it is generally a nice place in a period building as opposed to a new-build, I'd like to be able to keep the place as a rental property/investment.
In order to do this, I'll need to build up the equity to be able to release some when I come to buy my house down the line. Currently I should have 15% based on a value of £163500, hopefully in 4 years or so with the introduction of the station this should have increased.
Anyway, I'm rambling... One idea that I have had is to buy the flat now but continue to live at home with my parents for the 1st year/18 months, let the flat out to somebody and downpay the mortgage. This should allow me to build up a large amount of equity in the place as Id use all rental and the money saved from living at home to add to the pot for throwing at the mortgage when it is time to remortgage. Potentially this could be £1000 a month, plus the £800 I've paid in the mortgage (and reducing the amount owing), plus the potential appreciation in value of the flat.
I guess the question is, is this feasable and will I just have to get a basic "permission to let" from the mortgage company in view of the fact that I can easilly afford the repayments (as they are happy to lend on the basis of me living there)?
I will be moving into the place after 12/18 months so I am not actually "buying to let", and it will be the only property in my name.
Hopefully that makes sense, any advice would be ideal.
Cheers!
I'm potentially about to pull the trigger on buying my first property. It's a 1 bed flat which is very near to what will become a Crossrail station in 4/5 years time so could potentially be a great investment.
My plan is to move on to a larger place with a garden etc in 3/4 years time, however in view of the fact that the flat should be very easy to let out due to the proximity to the station and that it is generally a nice place in a period building as opposed to a new-build, I'd like to be able to keep the place as a rental property/investment.
In order to do this, I'll need to build up the equity to be able to release some when I come to buy my house down the line. Currently I should have 15% based on a value of £163500, hopefully in 4 years or so with the introduction of the station this should have increased.
Anyway, I'm rambling... One idea that I have had is to buy the flat now but continue to live at home with my parents for the 1st year/18 months, let the flat out to somebody and downpay the mortgage. This should allow me to build up a large amount of equity in the place as Id use all rental and the money saved from living at home to add to the pot for throwing at the mortgage when it is time to remortgage. Potentially this could be £1000 a month, plus the £800 I've paid in the mortgage (and reducing the amount owing), plus the potential appreciation in value of the flat.
I guess the question is, is this feasable and will I just have to get a basic "permission to let" from the mortgage company in view of the fact that I can easilly afford the repayments (as they are happy to lend on the basis of me living there)?
I will be moving into the place after 12/18 months so I am not actually "buying to let", and it will be the only property in my name.
Hopefully that makes sense, any advice would be ideal.
Cheers!
It still needs to be BTL.
If you are not intending on living in the property from the outset it's BTL.
A lender isn't going to give you consent to let when you've never actually lived in the property and have basically done a 'back door BTL' by buying a property with a smaller deposit on a residential basis.
To do this on a BTL you are going to need a 25% deposit as you are going to be a First Time Buyer as well as a First Time Landlord, the combination of which severely limits the lenders available to you.
Also, most lenders have a minimum salary of £20k+ which you would need to satisfy.
If you are not intending on living in the property from the outset it's BTL.
A lender isn't going to give you consent to let when you've never actually lived in the property and have basically done a 'back door BTL' by buying a property with a smaller deposit on a residential basis.
To do this on a BTL you are going to need a 25% deposit as you are going to be a First Time Buyer as well as a First Time Landlord, the combination of which severely limits the lenders available to you.
Also, most lenders have a minimum salary of £20k+ which you would need to satisfy.
Well thats a bit of a bugger! Cheers for all the advice.
The flat is too good value to turn down in any case, I'm utterly convinced that it will always be worth at least what I have paid for it so I have agreed to take the place at £165k this morning.
Ideally I would like a 2 bed but the equivalent flat with the extra room is either £60k more expensive or £30k more expensive and over a mile to the station, neither of which really work!
I still think that my plan to build up equity as quickly as possible and rent out later on is a valid one, I definately want to keep this place for at least 10/15 years. I think the impact of Crossrail is underestimated by most.
Now to work out how much to put down on the mortgage and whether its worth begging for someone else to pay the legal fees...
The flat is too good value to turn down in any case, I'm utterly convinced that it will always be worth at least what I have paid for it so I have agreed to take the place at £165k this morning.
Ideally I would like a 2 bed but the equivalent flat with the extra room is either £60k more expensive or £30k more expensive and over a mile to the station, neither of which really work!
I still think that my plan to build up equity as quickly as possible and rent out later on is a valid one, I definately want to keep this place for at least 10/15 years. I think the impact of Crossrail is underestimated by most.
Now to work out how much to put down on the mortgage and whether its worth begging for someone else to pay the legal fees...
swerni said:
You want to buy a flat and still live at home with mummy and daddy?
Tbf a mate did this. Lived by himself for 6 months and got fed up, so went back home. He rents out the flat which covers his mortgage plus £200/month in his back pocket and now rents a place with his gf which is much nicer, and cheaper (as the rent is split), than the place he owns. iain014 said:
Well thats a bit of a bugger! Cheers for all the advice.
The flat is too good value to turn down in any case, I'm utterly convinced that it will always be worth at least what I have paid for it so I have agreed to take the place at £165k this morning.
Ideally I would like a 2 bed but the equivalent flat with the extra room is either £60k more expensive or £30k more expensive and over a mile to the station, neither of which really work!
I still think that my plan to build up equity as quickly as possible and rent out later on is a valid one, I definately want to keep this place for at least 10/15 years. I think the impact of Crossrail is underestimated by most.
Now to work out how much to put down on the mortgage and whether its worth begging for someone else to pay the legal fees...
So, are you going to live in it or rent it out?The flat is too good value to turn down in any case, I'm utterly convinced that it will always be worth at least what I have paid for it so I have agreed to take the place at £165k this morning.
Ideally I would like a 2 bed but the equivalent flat with the extra room is either £60k more expensive or £30k more expensive and over a mile to the station, neither of which really work!
I still think that my plan to build up equity as quickly as possible and rent out later on is a valid one, I definately want to keep this place for at least 10/15 years. I think the impact of Crossrail is underestimated by most.
Now to work out how much to put down on the mortgage and whether its worth begging for someone else to pay the legal fees...
Sarnie said:
So, are you going to live in it or rent it out?
It looks as though it will be difficult to rent it out without bending the rules, so I'll live in it and try to build up some savings where possible.I really do like the place and would be happy living there, I just always like to plan a long way ahead with everything and am trying to find the best way to set myself up for the second house which will be the one with the garden and the garage etc.
Cheers
What is the flat like size and layout wise? If you've got a decent size lounge and bedroom with neither being used to access the bathroom or kitchen you could forgo a lounge and rent out the bedroom whilst you turn the lounge into a bedsit. Not ideal but would still give you a decent income and enable you to maximise the return for a couple of years.
Probably too late now, but for the extra money it's worth getting a 2 bed as opposed to a 1 bed flat.
After 2 years my mortgage has come down to the point it's now less than the rent&bills I get from my lodger, so essentially I'm living there 'for free' with only bills and council tax to pay.
I have a friend in a similar priced flat, slightly bigger but only 1 bed. As he has to stump up the whole rent himself.
After 2 years my mortgage has come down to the point it's now less than the rent&bills I get from my lodger, so essentially I'm living there 'for free' with only bills and council tax to pay.
I have a friend in a similar priced flat, slightly bigger but only 1 bed. As he has to stump up the whole rent himself.
Not sure if i'm missing something here but if you don't mind staying with your parents for the next 12/18 months and want the big house, would it not be better just to stay with them and save the approx £1200 you will have to pay to live in the flat?
That would give you about 20k towards your house deposit plus you would have the advantage of not having the costs involved with selling the flat/etc?
That would give you about 20k towards your house deposit plus you would have the advantage of not having the costs involved with selling the flat/etc?
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