Considering BTL

Pheebs67

Hi Folks,

I'm looking for some initial advice before I go and sit with an estate agent or two for advice too.

I'm debt free and have no mortgage on the house we live in (it's part owned by parents so I'm not looking to secure anything against this) so my outgoings are limited to utilities on the house only.

I've been pondering a BTL in the area for a while now but never gotten around to investigating the real life potential for it in my circumstances. There's an area not too far from us that is a nice enough area that is close to the train station for commuters and situated between 2 big ish cities where workers would commute to and we're not too far from a Uni too so I reckon there's a good renter base there.

I'm not looking at spending more than £100 - £150k tops and would happily do some work to bring things up to scratch as I'm a practical kinda guy too

I have a small deposit at the minute (£15k ish)

Am I being realistic to expect to be able to afford a BTL mortgage? Does anyone have any general advice on how to approach my investigations into this forray?

Thanks in advance

<sebb>

You'll generally need at least a 25% deposit for BTL mortgages from what I've seen so far. That's not to say there arent others out there that offer lower LTV ratios, but I havent seen them.

_Andy_

You haven't got enough deposit at the moment.

Gorgeous_George

Get the numbers right or it could cost you dearly. Then, get the right tenants.

Your spread is quite large at £100K to £150K. The difference could mean the difference between a profit and a loss. At £100K I would want at leats £750 pcm and at £150K, £1,150. Is that achievable? If not, I'd forget it.

GG

Raggs_2

Gorgeous_George wrote: »

Get the numbers right or it could cost you dearly. Then, get the right tenants.

Your spread is quite large at £100K to £150K. The difference could mean the difference between a profit and a loss. At £100K I would want at leats £750 pcm and at £150K, £1,150. Is that achievable? If not, I'd forget it.

GG

That's over 11% yearly return, sounds a little too high to be hoping for. And I would have thought, not very achievable anywhere.

phlash

I achieve that.

JA1000

Why would you go to an EA for advice - hopefully on the property front not the financial front. Letting agents and doing your own investigations would be more useful.

Owain_Moneysaver

The "11% yearly return" assumes full occupancy, no voids, and no expenses (including tax) or letting fees.

It only takes a couple of void periods and a new carpet to change that return quite drastically.

Gorgeous_George

Raggs wrote: »

That's over 11% yearly return, sounds a little too high to be hoping for. And I would have thought, not very achievable anywhere.

I was close to buying a house for £46K which would have commanded a rent of £450 pcm. Unfortunately, somebody else came in for it and I refused to get into an auction after my final offer of £50K was not accepted.

There'll be more houses but in the meantime I'll invest elsewhere and earn 5% after tax without the hassle of tenants and without the risks that property ownership brings with it.

What do you consider to be a reasonable return?

GG

Pheebs67

JA1000 wrote: »

Why would you go to an EA for advice - hopefully on the property front not the financial front. Letting agents and doing your own investigations would be more useful.

I'm expecting that Estate Agents give advice on buying a houses no? That, combined with in depth knowledge of the area and it's tenanacy / saleable virtues, would be something I'm after to make an informed decision on such an investment . . .

Finance wise, as this thread make a small contribution towards, I'm doing my own investigations . . .

Thanks folks for the advice so far . . . all useful stuff . . .



I'm a tad confused though . . . This thread (just as an example);

forums.moneysavingexpert.com/showthread.html?t=2355629

Suggests someone wanting a larger mortgage than me (153k mortgage) in the situation that they earn less than myself and my other half, they have roughly the same deposit as me and they have a child too . . .

How does it stack up that these figures look "roughly ok" but my circumstance looks like I need a bigger deposit? Is it just that I'm looking for a BTL rather than a residential mortgage and does that command a larger deposit?

Cheers folks

VIGILANT22

BTL mortgages go to max 75% LTV for a purchase