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    • Vaderkad84
    • By Vaderkad84 5th Dec 17, 10:53 PM
    • 8Posts
    • 0Thanks
    Vaderkad84
    Confused please help - buying a house
    • #1
    • 5th Dec 17, 10:53 PM
    Confused please help - buying a house 5th Dec 17 at 10:53 PM
    Dear all

    I have around 60k in savings and I am currently living with my parents.

    I always intended to buy a house in the future once I got married however I am looking to fast forward things slightly.

    Currently I have a job where I am earning around 40k, I believe that it is probably a good time to buy a house as I will be able to get a mortgage. It is likely that I will change jobs in a few years and my annual salary would not be as high which will effect how much money I can borrow from the bank is mortgage.

    I was thinking of buying a property around 200k and possibly renting out in the future. I would possibly sell this property or eventually live in it. I will be able to pay the mortgage as I will be living at home and currently do not have many outgoings.

    I was then thinking of buying a much cheaper property and possibly building a property portfolio. However if I eventually want to buy a property of my own,
    will these properties be taken into account when I am offered a mortgage? There is a possibility at this time my salary would be lower than what I earn now.

    What do I do?

    Do I buy a nice property now whilst I have the salary?

    Do I buy a cheaper property and rent it out as it will assist me in getting a mortgage in the future eventhough my salary will be less

    How much money do you put in a deposit from your savings?

    I look forward to any advice. Thanks
Page 1
    • Slithery
    • By Slithery 5th Dec 17, 11:18 PM
    • 350 Posts
    • 484 Thanks
    Slithery
    • #2
    • 5th Dec 17, 11:18 PM
    • #2
    • 5th Dec 17, 11:18 PM
    To let the property you will need a buy-to-let mortgage instead of a residential mortgage. These have different rules, one of which being you must already own a residential property, so this could make it a non-starter straight away.

    Being a landlord isn't easy money, you need to run it as a business. Please at least read all of the following to see what you would be getting yourself into...

    http://forums.moneysavingexpert.com/showpost.php?p=67759929
    Last edited by Slithery; 05-12-2017 at 11:26 PM.
    • glasgowdan
    • By glasgowdan 6th Dec 17, 6:48 AM
    • 2,630 Posts
    • 2,934 Thanks
    glasgowdan
    • #3
    • 6th Dec 17, 6:48 AM
    • #3
    • 6th Dec 17, 6:48 AM
    I think you should buy the 200k house and move into it and enjoy. Forget trying to build a property portfolio and focus on your career.
    • JoJo1978
    • By JoJo1978 6th Dec 17, 7:55 AM
    • 171 Posts
    • 158 Thanks
    JoJo1978
    • #4
    • 6th Dec 17, 7:55 AM
    • #4
    • 6th Dec 17, 7:55 AM
    A property portfolio is a hard route to a pension unless you're willing to put the work in. Once you've got a decent pension pot you might consider parking some of it in property, but as others have said there's a lot to consider
    Hamster in the wheel (London) 1999-2017
    Mortgage free since 2015; Pension pot sorted 2017
    Second career (what TBD!) 2018
    • steampowered
    • By steampowered 6th Dec 17, 9:42 AM
    • 1,943 Posts
    • 1,815 Thanks
    steampowered
    • #5
    • 6th Dec 17, 9:42 AM
    • #5
    • 6th Dec 17, 9:42 AM
    Get your own home first.

    A BTL mortgage would make it more difficult to buy your own home. Plus it is not particularly tax efficient.
    • Vaderkad84
    • By Vaderkad84 6th Dec 17, 10:47 PM
    • 8 Posts
    • 0 Thanks
    Vaderkad84
    • #6
    • 6th Dec 17, 10:47 PM
    • #6
    • 6th Dec 17, 10:47 PM
    Thank you for your advice.

    The problem is that as my parents Need my help in caring for them so i wish to look after them for a few years before i move out.

    However by that time i may not have the salary that i am on now which will effect my mortage.

    The housing market will only get worse so i thought i could possibly invest in a nice house now. But the problem would be that i would not be living in it but the upside would be that it be seen as an investment as house prices will only increase and plus i currently have a good salary.

    What about buying a nice house and later letting it out with the permission of the bank?

    I am very confused
    • Vaderkad84
    • By Vaderkad84 6th Dec 17, 10:48 PM
    • 8 Posts
    • 0 Thanks
    Vaderkad84
    • #7
    • 6th Dec 17, 10:48 PM
    • #7
    • 6th Dec 17, 10:48 PM
    Could you kindly explain how it would make it difficult eventually buying my own home if i did consider buying a property to rent out first?
    • Moriath
    • By Moriath 7th Dec 17, 12:04 AM
    • 25 Posts
    • 15 Thanks
    Moriath
    • #8
    • 7th Dec 17, 12:04 AM
    • #8
    • 7th Dec 17, 12:04 AM
    Houses dont always go up in value they can go down as well. So dont rely on that.
    • Moriath
    • By Moriath 7th Dec 17, 12:06 AM
    • 25 Posts
    • 15 Thanks
    Moriath
    • #9
    • 7th Dec 17, 12:06 AM
    • #9
    • 7th Dec 17, 12:06 AM
    Could you kindly explain how it would make it difficult eventually buying my own home if i did consider buying a property to rent out first?
    Originally posted by Vaderkad84
    You wouldnt be a ftb and so you wouldnt have all the perks that ftb get from the government. Ie less stamp duty etc.

    Also if you still have this house you may have to pay an extra 3% stamp duty as you will own more than one property.
    • Cakeguts
    • By Cakeguts 7th Dec 17, 12:39 AM
    • 3,261 Posts
    • 4,527 Thanks
    Cakeguts
    Could you kindly explain how it would make it difficult eventually buying my own home if i did consider buying a property to rent out first?
    Originally posted by Vaderkad84
    You would be unlikely to get a mortgage. For a property that you are going to rent out you have got to have a buy to let mortgage not an ordinary residential one. To get a buy to let mortgage you would need to already own a property that you live in. The rules concerning buy to let mortgages mean that you can't get one for a first property. So the only way that you could buy a house now is if you get an ordinary mortgage and then you move into the property and live there.
    • getmore4less
    • By getmore4less 7th Dec 17, 6:30 AM
    • 30,712 Posts
    • 18,359 Thanks
    getmore4less
    will these properties be taken into account when I am offered a mortgage? There is a possibility at this time my salary would be lower than what I earn now.
    Originally posted by Vaderkad84
    However by that time i may not have the salary that i am on now which will effect my mortgage.

    The housing market will only get worse so i thought i could possibly invest in a nice house now. But the problem would be that i would not be living in it but the upside would be that it be seen as an investment as house prices will only increase and plus i currently have a good salary.

    If you get a mortgage based on the high salary how are you going to afford in on the lower salary?
    • saajan_12
    • By saajan_12 7th Dec 17, 8:21 AM
    • 983 Posts
    • 664 Thanks
    saajan_12
    Could you kindly explain how it would make it difficult eventually buying my own home if i did consider buying a property to rent out first?
    Originally posted by Vaderkad84
    You'll face issues at both stages: even if you do find a lender, you'll have a very narrow choice and likely be stuck with a very high rate.

    1) Buying first rental house
    For a rental property, you need a BTL mortgage which typically requires you are
    - home owner
    - over 25 years
    - 25% deposit
    - higher interest rate

    2) Buying residential home later
    As you already own a property, you'll
    - pay additional 3% stamp duty on the entire purchase price
    - not benefit from gvt FTB schemes to help with deposits etc
    - lower salary and rental income NOT usually taken into account.
    - BTL mortgage MAY reduce your affordability if rent and mortgage payments are no longer in line
    • JoJo1978
    • By JoJo1978 7th Dec 17, 8:35 AM
    • 171 Posts
    • 158 Thanks
    JoJo1978
    Agree with other posters. Would also add that any house you buy now as FTB with residential mortgage may suit you, but could be totally unsuitable as a rental property if you rent it out later on unless you do a lot of research and are prepared to compromise on your own wishlist to buy a house that's suited to being let out.

    You hint that you are also at the moment caring for parents. Would you want the additional responsibilities of being a landlord on top of that? I became an accidental landlord in 2008 because I couldn't sell and it was costly to pay agents but I didn't have the time to deal with the responsibility.
    Hamster in the wheel (London) 1999-2017
    Mortgage free since 2015; Pension pot sorted 2017
    Second career (what TBD!) 2018
    • Vaderkad84
    • By Vaderkad84 7th Dec 17, 10:42 PM
    • 8 Posts
    • 0 Thanks
    Vaderkad84
    If you get a mortgage based on the high salary how are you going to afford in on the lower salary?
    Originally posted by getmore4less
    Sorry i meant the higher salary would allow me to get a better mortage so i though i would buy a house whilst i earnt well
    • Vaderkad84
    • By Vaderkad84 7th Dec 17, 10:44 PM
    • 8 Posts
    • 0 Thanks
    Vaderkad84
    You'll face issues at both stages: even if you do find a lender, you'll have a very narrow choice and likely be stuck with a very high rate.

    1) Buying first rental house
    For a rental property, you need a BTL mortgage which typically requires you are
    - home owner
    - over 25 years
    - 25% deposit
    - higher interest rate

    2) Buying residential home later
    As you already own a property, you'll
    - pay additional 3% stamp duty on the entire purchase price
    - not benefit from gvt FTB schemes to help with deposits etc
    - lower salary and rental income NOT usually taken into account.
    - BTL mortgage MAY reduce your affordability if rent and mortgage payments are no longer in line
    Originally posted by saajan_12

    Thanks i was unaware i already had to be homeowner when applying for a btl mortgage
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