interest or repayment?

dizzyhead_2

Need advice please, buying property for £140000 with 10% down, not sure whether to get interest only mortgage which will be payed by the person renting and then have an ISA to save the rest or get a repayment mortgage which I know won't be covered by the rent and pay the rest myself?
Or should I just not buy and save all the money and buy in 3 years time when I return to UK?

regularsaver1

so your not getting a buy to let mortgage then? as usually thats 15% deposit - as you mention being paid by the person renting? as you are not intending to live in it. you need to let the lender know this

dizzyhead_2

Don't need to get buy to let mortgage due to loop hole for forces families purchasing to move back after a posting abroad.

lynzpower

Go for repayment in my view.

If you have an IO and the market dips/ crashes/ etc then you will be in negative equity before you even live in it. additionally, will you keep that cash safe in the isa, or wil you end up having to use it say for repairs for the property.

Additionally, as you will be Out of the UK you HAVE to nominate a managing agent, to deal with repairs etc on your behalf. We were told this by a Private lettings officer when we were taking a landlord to court ( never got there in the end) as she was living out of the UK and the PLO suspected a large fine would be due to her for not appointing a managing agent in the UK.

I would total all your outgoings up ( inc life. building insurance any other specific insurances you will need as you will be letting out) and the cash you wil have to put aside for voids etc. Additionally, how will you manage voids if you are out of the UK? If your tenant moves out etc, how will you get another, or if you have to evict, how can you do it if you are out of the uK, doubt its impossible, but Im guessing you wont be able to just pop back whenever you are needed.

And work out whether its worth it. In terms of financial gain, and the amount of hassle that this venture could incur. If you are out of the UK for 3 years, and you can save the equivalent, you will have a hefty deposit when you get back.

regularsaver1

you still need to let the lender know about the letting - and insurance of course