Mortgage Virgin

gus_parker

Myself and my partner are completely knew to the whole mortgage process and are blinded by the range available. We have read Martin's guides but are unsure what would be the best route to take. It is quie a strange situation as well and therefore it is difficult to compare approaches. We are in quite good financial situation but this mainly comes from us being frugal with restricting spending rather than knowledge of the financial systems. I would just like some basic views from people so that I can arm myself with knowledge when talking with brokers etc. I have given a basic overview of our situation below:

House Price: £135000
Deposit: £60000
Mortgage needed: £75000
Mortgage Type: Buy to Let (But don't currently own a house as living in a house which is tied to our jobs)
Savings: Able to save £3000 a month
Risk: Medium to low
Term: Hope to pay off as soon as possible 2 to 3 years if poss.

Some general advice to start me off would be great and much appreciated


Gus

opinions4u

Here's my advice.

Prices are still falling.

Buy in 12 months.

You'll have a further £36,000 in deposit and your purchase price will be £120,000 instead!

You'll only need a £24,000 mortgage then! I just made you over £50,000!

gus_parker

Thanks - your advice is much appreciated. I was saying the same to my partner about a few months ago. However, a bit of background may explain why we are still thinking about it

1. It is a property that we want to move into in the perfect area in a few years - and is ideal for this purpose.

2. We put in a very low offer - way below market price (which I have checked on a number of different searches) and they have surprisingly accepted. The property was empty and the owner was desperate to sell.

We realise that the financially smart thing would be to wait as prices are still going down and that in the long-term we may slightly lose out in comparison to waiting a year and amassing a bigger deposit. We are aware of this and have accepted it. If we had had to pay full market price I would not be going anywhere near it. However, this is not just an investment property for us. We have seen a perfect property for us in the perfect area - where we will be in roughly 3-6 years time. All we want to do is get some tennants to help pay off our mortgage till then.

Sorry about being long-winded but thought this might help to ive background.

Thanks for advice again it is really appreciated.

Gus

herbiesjp

Based on those figures you should find it pretty easy.

Just be careful that being FTBs, and also first time landlords will put you outside of the criteria of some lenders.

You do not put the expected rental income on the property, but I'm guessing it will be enough to cover the 75k mortgage - do you know what rental income to expect?

gus_parker

At least £500 per month. We really just want this to contribute to paying off the mortgage and are prepared to put in more to pay it off sooner

herbiesjp

In terms fo getting the mortgage agreed on a BTL basis, the rental income would need to cover the rental at e.g 130%.

Otherwise the BTL mortgage would not get agreed.

In the eyes of the lender is not simply the case that the rental income will contribute towarsd the mortgage, it has to be able to sustain the mortgage on its own.