First time buyer, Buy-to-let, No/Low income??

blackrandomapple

Hey folks,

Thought this might be a good question on money saving expert due to the high amount of people who use this site,

Firstly, I am a 23yr old male looking into first time buying a property on a buy to et mortgage,
But. . . I am self employed and i do not have a reliable and stable income,
as is stands i dont really have a penny But with help from my family we hope to get things up and running but it is hard to get good solid info on what i can and cant do.

As a deposite we my mum is looking into borrowing money against her property to fund a deposite for me to get a buy-to-let

Im looking at propertys around the £110,000 mark with a possible monthly rental income of £500-600

My biggest question is, Is it possible to do such thing with an unstable income? And is it possible the way i have planned?

Obviosly i do not intend to add money from my income to a mortgage each month, So the plan would NEED to pay for itself,

Also is this a bad time to set up?

Any help would be much appreiciated here!

Regards

James

P.s I have added a pol to view opinions, But please dont just votw, i really need input!
Thank again!

beecher

If you have no reliable income then you have no chance. Borrowing for a deposit makes no sense. You'd be paying interest on the whole £110,000 - at 6% this is £550/month so you wouldn't be making any money, and wouldn't be paying off the capital either. Factor in the cost of maintaining the property, and the cost of voids, and you're onto a loser.

thriftymomma

The lender would want to see that the rental income will cover the mortgage payments and you'll need minimum 25% deposit.
How long have you been self employed for?

unite79

If you need a poll to tell you if you are doing something STUPID, then ask yourself a question...

blackrandomapple

Im not after answers, Im after advice, Its early days here and im trying to gain experiece from other people!

I have have been self employed for about a year, Before that i way a hgv driver

SarBear1980

Firstly, it's risky asking your mum to borrow money against her property as that then puts her home at risk. Does she have a stable income? Does she not have any spare money you could use instead?

Buy-to-let mortgages have generally always required a 25% deposit and the interest rates are far higher than normal. Rental levels are quite low at the minute as they've been forced down by the demand and although they're stabilising you'd have to have a very desirable property in order to get a good rental income.

Letting houses isn't always as straight forward as people think either. I have two and you have to keep on top of the legislation with regards to regular gas and electricity checks. You also have to be prepared to fork out for any emergency repair works that may need doing, boilers can be expensive things!! If you go through an agency, they will generally take around 8% of your income and that's for not doing much really. If you want to guarantee you collect your rent, you need insurance as the agencies won't do that for the basic commission.

There's lots to think about and I'd suggest you think more about putting some money aside and buying your own place later on down the line when mortgages are hopefully more easy to come by. You could still make money by getting a lodger?? Sounds like too risky an investment at the minute.

Good luck!

Conrad

There are b2l mortgages for ftb that need no income stating. Min deposit 25%.

blackrandomapple

SarBear1980 wrote: »

Firstly, it's risky asking your mum to borrow money against her property as that then puts her home at risk. Does she have a stable income? Does she not have any spare money you could use instead?

Buy-to-let mortgages have generally always required a 25% deposit and the interest rates are far higher than normal. Rental levels are quite low at the minute as they've been forced down by the demand and although they're stabilising you'd have to have a very desirable property in order to get a good rental income.

Letting houses isn't always as straight forward as people think either. I have two and you have to keep on top of the legislation with regards to regular gas and electricity checks. You also have to be prepared to fork out for any emergency repair works that may need doing, boilers can be expensive things!! If you go through an agency, they will generally take around 8% of your income and that's for not doing much really. If you want to guarantee you collect your rent, you need insurance as the agencies won't do that for the basic commission.

There's lots to think about and I'd suggest you think more about putting some money aside and buying your own place later on down the line when mortgages are hopefully more easy to come by. You could still make money by getting a lodger?? Sounds like too risky an investment at the minute.

Good luck!

Thats some good info there, Its always good to get other peoples opinion, On the deposite side of things i have grand parents that maybe willing to invest in me by helping out with money for a return in the long run, like i said this is very early stages atm, But i would like to think i can buy more than one house in the future to then gain from them,
I understand about repairs, Boilers etc and that would all be coming from my own pocket unless there was any money being made as profit!
I nearly bought a house with my ex-girlfriend we got right to the last stages of buying when i pulled out so i do have a small understanding of what goes on, I have booked an appointment with the mortgage adviser who helped me out the first time so i will see what his views are on things becuause he will be able to do my calculations with me!

Thanks Again

blackrandomapple

Conrad wrote: »

There are b2l mortgages for ftb that need no income stating. Min deposit 25%.

Do you have any mortgage lenders in mind?

Regards

SarBear1980

The other thing I might have forgot to mention is that you have to pay tax on any rental income on your self-assessment. Only the interest on the mortgage is allowable. I have a mortgage of around £385 a month (£35k over 10 years) and receive rent of £450 after commission and I pay around £500 a year in tax. Bear this is mind also!