Buy to Let - First Time Buyer

clairehoward

Hi all,

I would like buy a property, which I woudl then like to rent out. I have been doing research into this - however am getting conflicting advice. I have been told that a 25% deposit would be need, as a lender would only lend on 75% of the propoerty value. I have spoken to a mortgage advise who informed me otherwise.
I will appreciate some advice on this. As I am a first time buyer - are there any restrictions on doing this? Also, is it the right to be thinking about this given the current house prices?

Thanks
Claire

dunstonh

Rental yields are generally very low and the pressures on a potential house price drop are ever increasing. It should be treated as a high risk transaction at this time.

Most people going into buy to let mortgages do not understand or realise the risk they are taking. They also don't realise the tax issues involved and will get a shock at the tax bill they have to pay when they eventually sell up.

Buy to Lets do require larger deposits when a mortage is being obtained. There are some ways round it but if you cannot afford to put a 25% deposit down then you shouldnt even consider it. A 30% price drop on property would not be unexpected.

clairehoward

Thank you for your reply. I would really like to get in to the property field and make money off of my investments, as I am sure everyone wants to. I am probably a little naive in my plans and aspirations around this. Are you able to offer any advice on using my siutation of being a first time buyer to my advantage? Should buy a run down place and 'do it up' - would be a more profitable venture?

silvercar

You are going to find it difficult to get a buy-to-let mortgage without being a property owner yourself.

sarah_elton

silvercar wrote:

You are going to find it difficult to get a buy-to-let mortgage without being a property owner yourself.

Not necessarily true, I have a friend who still lives at home and owns a BTL.

Most BTL mortgages do require a large deposit, and also that rent achieved monthly is greater than 130% of the repayment.

ginger_nuts

the amout of deposit will depend on the lender .Some will require a 15% deposit some 25% . The rent has to cover the mortgage ,However as a FTB can you contribute towards the mortgage . Be realistic about the expected rent .Who would you rent to ?

clutton_2

""Should buy a run down place and 'do it up' - would be a more profitable venture""

Claire, with the greatest of respect, this is an utterly mad idea !!!!!!! if you have never owned a house of your own, and have never owned an investment property, it is MOST unlikely that you will know how to make money as a property developer - for that is what you are suggesting !!

Property development 3-4 years ago was a cinch, any old jo soap could make money in that fast rising market, we are NOT in a fast rising market at present. Development is a very complex affair needing expert knowledge of building, plumbing, electrics, roofing, gas, damp, blah blah blah blah. To "do up" a house is a risky venture for a newbie.

BTL landlords have to comply with 67 different pieces of legislation - i am certain there will be more than a 100 for builders !!!!

Property is a fabulous business, but a HUGE learning curve, please take it step at a time !! May i recommend https://www.singingpig.co.uk as an extremely useful website to learn all about property (i hope Martin does not mind me advising this ?). There is also a comprehensive book list on there.

I researched, read, went to courses, conferences and networked for 18 months before i bought my first property.

good luck.

meanmachine_2

The first time you do anything you make mistakes. That's human.

Think about your "first day" in any job.

Surely your first development is like your first day. A steep learning curve that will help you avoid mistakes on your next go.

A lot of people's efforts have been flattered by the rampant house price inflation of the last few years.

It's been covering a multitude of sins and sinners.

By the way, Property Ladder is back this week. A good place to start is to watch a stack of those on UK Style.

Obviously it's all highly edited entertainment, but Beeny does talk a lot of sense (normally in the edit, which makes her look smarter and blessed with greater hindsight than in reality, I should think).

Pobby

I fully agree with dunstonh.I`m very wary of the property market right now and I view as a huge asset bubble that could{will}pop at some point.I could go into this market without a mortgage but as of now I am holding off.Be very,very careful with this.I have rented out a house before and I can tell you some horror stories.