BTL (or Landlord in general) as a tenant myself? + general questions

smallpurplepill

hermum wrote: »

Have you spoken to an IFA, who doesn't charge a fee. I know that things have changed in the last 18 months or so. When my daughter bought her property she needed to be on the electoral role, to have had a contract of employment & to have been in the job for 6 months. It seems that if that hasn't changed you are likely to meet that criteria. Speak to your bank as they should be able to give you advice without a credit check as they will know what money you have.

Thanks, not spoken to an IFA yet but seems like this is a good way to go.. I guess 'unofficially' (ie.. without actually making the application) they may have a good idea of which lenders are best to approach and so on, before actually doing a formal application process..

According to bank I am near the top of their internal scoring (though I didn't like their comment that "it's very unusual for a tenant to have this as normally it's only a homeowner" or something to that effect - so I wonder if there was a mistake somewhere and it's subsequently been corrected!) This was in 2007 when I was last looking to buy (due to the landlord selling and having to move on from there) so may be worth speaking to them again now..

smallpurplepill

Thrugelmir wrote: »

No it isn't. Though finding a lender that will advance monies to a Company as opposed to an individual isn't easy any longer.

I think this option needs a lot more thought and fact finding than I initially realised :beer:

Thrugelmir wrote: »

Why are all your savings in the bank?

Partly because up until about 2 years ago the interest on savings was often 'tiered' so the more that was kept together in a lump sum in the same bank the higher the interest (ie actual % interest rate... not just the return!) and a lot of the banks giving 6-7% sort of rates at that stage. Some savings accounts like Tesco do still do this so I have some money in there enough to reach the relevant interest 'band' etc.

Also because going back about 8 years I needed to prove total "net worth" (assets etc) on paper (long story not really relevant to now) and anything invested in ISAs, shares, etc etc couldn't be counted as it was only money that was actually in an instantly accessible account.

Now I have the (possibly mistaken) impression that if applying for a mortgage with the bank I have the savings with, the more money invested there, the more likely they are to take you on (as a previous poster mentioned above a bank you already bank with seems to have access to more info on spending and so on) so was reluctant to move it.

With all the interest rate reductions lately (B of E and banks) most ISAs are giving a smaller return than a savings account (even when tax is taken into account), I realise rationally that the ISA is also a way to "put away" that year's allowance and applies many times over in future years but can now only put about £3000 (or I think it's gone up a bit now) a year into an ISA account which doesn't really seem worth doing for the sake of the extra interest on the £3000 compared to that money being "hidden" from the rest of the savings.

Last reason being that every year (for the last sort of 6 years or so) I've thought again about buying and re-done the numbers etc so needed to be able to get hold of the money instantly for the deposit, but of course that hasn't happened.

Thrugelmir wrote: »

A good spread of investments using annual ISA allowance would be producing a reasonable return and income now.

Yeah, I think I can put that one in the category of "hindsight is 20/20" :A

Thrugelmir wrote: »

Have you invested into a pension scheme at all?

No, and at this age (28) it's too late to start one now, as above the main reason I didn't start one when I first had the chance at 18 was because of being able to prove income and assets, any money going out of payslips each month was less "on paper" that I was earning as annual salary is reduced by whatever the pension contribution is.

Also as a pension is really just an enforced savings scheme with the difference that you are tied into investing for 40 years (not just 3-5), don't get a fixed rate of return (and might not get a return at all) and don't have the capital at the end of it it seemed to compare poorly to saving in a bank etc over the same amount of time. The company offered I think 2% company contribution to 5% from salary (not sure of details now but something like that) but it still didn't really compute. (I don't think they mention the above in the sales literature!)

Speaking with the pensions adviser guy that visited the company, he thought the annual return (on money actually put into the pension) was about 8% but of course you don't get the capital back so 6% on savings plus still having the capital seems better in comparison.

Of course now base rate is 0.5% savings is nothing like 6% so the amount of income is a lot smaller now (probably gone to bail out a banker somewhere - They should do one of those schemes like "sponsor a dog" where the saver gets sent a quarterly update and photos of the banker they bailed out!)

franklee

It seems to me you essentially want a mortgage to buy your own home and you have a big deposit to put down (which should count for a lot) so have you tried the Mortgages & Endowments board?

http://forums.moneysavingexpert.com/forumdisplay.html?f=15

Can you add a link to your thread there if/when you do.

Personally I'm staying out as I still think prices are too high. YMMV.

The company idea does sound dodgy to me as it will be contrived to let you live there rather than renting it out. It's hard to predict how a lender would react to that.

Fire_Fox

Why do you think it's too late to start a personal pension? You will be forced to in a couple of years anyway IIRC. The big difference between cash in the bank/ a BTL and a pension is the pension is relatively safe if you get made redundant or fall ill/ injured and cannot work. It also doesn't have to be one or the other, as your salary increases you should be able to have savings or property AND a decent pension pot.

When you say credit cards how many are we talking about, do you have a lot of available credit? This will not be good for scoring. Are you registered to vote? 'Only' being at your current address for two and a half years is not unstable. Under one year in your current job may be a problem as all your rights kick in at that point. You are saying 'computer says no' but you haven't actually applied for a mortgage??

smallpurplepill

Fire_Fox wrote: »

Why do you think it's too late to start a personal pension? You will be forced to in a couple of years anyway IIRC.

I suppose because I've already "lost" 10 years of potential contributions (age 18-28) so the amount I'd need to put in now wouldn't result in a decent return?

Can you clarify on "forced to in a couple of years", is this some legislation or something else?

Fire_Fox wrote: »

The big difference between cash in the bank/ a BTL and a pension is the pension is relatively safe if you get made redundant or fall ill/ injured and cannot work. It also doesn't have to be one or the other, as your salary increases you should be able to have savings or property AND a decent pension pot.

True, hopefully as you say as I get more income and money in general it should be possible to invest/provide for the future a bit more sensibly!

Fire_Fox wrote: »

When you say credit cards how many are we talking about, do you have a lot of available credit? This will not be good for scoring. Are you registered to vote? 'Only' being at your current address for two and a half years is not unstable. Under one year in your current job may be a problem as all your rights kick in at that point. You are saying 'computer says no' but you haven't actually applied for a mortgage??

3 credit cards: Capital One since 2001 with £4250 limit, Llloyds since 2002 with £2500 limit and Natwest since 2004 £4500 limit (All of the limits are due to various increases that the companies have applied and weren't specifically requested by me - though admittedly I had the option to 'refuse' the increase and didn't take any action) Each paid off back to a zero balance and on time each month - normally spend about £300-400 a month on them and that is for normal shopping, diesel, any general expenses like that.

Also a Vodafone monthly plan for £10 a month (plus any additional call charges and internet on top of what's included, I normally end up paying about £12-15 a month which is paid through a direct debit)

No loans or any other credit.

I am registered on the electoral roll and have been on previous addresses etc.

I haven't actually made a formal mortgage application as I don't yet have a specific house to 'apply' for, the closest I got though was discussions with the "advisers" (I guess sales people really) who have access to internal and scoring data on-screen but not to the stage that the credit search actually appears on file.

Interesting that 2 and a bit years isn't thought to be a short time - wonder if it could be a combination of addresses since previous address was 2 years, address before that 18 months, on each of those occasions was moving due to being forced to by landlords rather than voluntarily. (Forced to ie selling the house etc.. not for non-payment of rent or anything like that!)

DawnW

If you want to buy a house, why not speak to a fees free, whole of market mortgage advisor? Don't be put off by one bank. And you are not too old to start a pension - hardly anyone starts one at 18! But that is a separate issue!

I would do a bit of reading up before you do either though to be honest.
Good luck!

Fire_Fox

smallpurplepill wrote: »

I suppose because I've already "lost" 10 years of potential contributions (age 18-28) so the amount I'd need to put in now wouldn't result in a decent return?

Can you clarify on "forced to in a couple of years", is this some legislation or something else?

http://www.dwp.gov.uk/policy/pensions-reform/the-pensions-act-2008/
IMO it won't be long before opting out is not an option. Having 'lost' ten years is not a reason to lose the next forty years contributions! I would have thought someone of your age would have jumped at the chance to beat the taxman.

My father started paying maximum AVCs in his forties, retiring in his early fifties. He now takes home a very tidy sum - at least a couple of grand a month - alongside owning a duplex apartment outright they do very well indeed. By way of contrast my mother's pension is an absolute pittance as they withdrew her pot when I was a baby and has regretted it ever since. Paying AVCs in your forties when you have a family to feed, clothe and house is not easy, far better to pay a little a month over a long period.

smallpurplepill wrote: »

3 credit cards: Capital One since 2001 with £4250 limit, Llloyds since 2002 with £2500 limit and Natwest since 2004 £4500 limit (All of the limits are due to various increases that the companies have applied and weren't specifically requested by me - though admittedly I had the option to 'refuse' the increase and didn't take any action) Each paid off back to a zero balance and on time each month - normally spend about £300-400 a month on them and that is for normal shopping, diesel, any general expenses like that.

I haven't actually made a formal mortgage application as I don't yet have a specific house to 'apply' for, the closest I got though was discussions with the "advisers" (I guess sales people really) who have access to internal and scoring data on-screen but not to the stage that the credit search actually appears on file.

You have a lot of available credit which makes you higher risk as you could rinse everything and get into trouble. The official MSE guidance is to close down a couple of cards, keeping the one that gives you the best interest rate, points or other benefits.
http://www.moneysavingexpert.com/loans/credit-rating-credit-score

You can (should) ask your chosen lender or mortgage broker for an AIP (agreement in principle) before you house hunt. This won't mark your credit file, it simply relies on you being honest about your assets, liabilites, income etc. As you say the full score will be done when you have a specific house in mind.

Good luck!