First Time Buyer - Purchase Years Prior To Moving Out?

Smiiithy

As a first time buyer aged 18, I'm becoming increasingly concerned about house prices and the issues for first time buyers.

I was considering that if I was able to get a mortgage, would it then be feasible to rent this out and thus pay my mortgage until I intend to move in?

This could then freeze the increase in price of the house as somebody else is already paying?!

I'm not exactly a handy-man, but not afraid to get stuck in and my family all have talents and enthusiasm to contribute to a renovation project for my first house - as they did for my elder brother.

Could this prove a worthwhile investment or would the renting out prove a problem?

Your thoughts would be much appreciated.

noyk

Your quite young to consider buying, shouldn't you be out having some fun! What makes you think prices will continue to rise, in parts of the country they are going down, don't always believe what people or the headlines tell you.

However, if your really serious, do you have deposit and income to support a mortgage, maintenance, rates etc if you can't let it out? What your considering is a but-to-let mortgage, but you won't be able to get one AFAIK until your able to let it out as the/any renovation needed would have to happen prior to a lender giving you a BTL mortgage.

bekkki1

I think its a good idea for you to buy now. As When I was 18 i bought a house but sold it not long after making no profit. The same house is know worth 5 times as much and I cant afford to buy another house in the same town. Wished id never got rid.

Least when you decided to settle down you'll have somewhere to live and a lower mortgage.

F_T_Buyer

Yes, but would the rent minus all the costs cover the mortgage? Very doubtful.

Will it go up in value? Well the vast majority of property investors hope so. But what's supporting it? The fundamentals aren't, property has never been as high today in relation to our income, so what is? Speculation. What happens when the inevitable recession comes?

There are lots of reasons why house prices are so high. The average age of a FTB is currently 34, way above you age. Values have been pushed high because of speculation...

If I were you enjoy your youth, ask this question again is 3 or 4 years... Things will be totally different then!

Claire_DC

F_T_Buyer wrote:

Will it go up in value?

As much as i would like our house to go up in value (we bought in June) the way i see it, is that we will only realise the value if we sell the house and purchase a cheaper house. This would be hard for us, considering we're not high up on the ladder, property wise so to speak. We did get a bargain with this house really but would find it hard to find a decent cheaper house that we would be happy to live in.

The reason we bought this house, primarily is so that we had somewhere to live that was cheaper than renting, bigger than where we were previously living, could be decorated whenever and however we want, and where ultimately where the money we pay goes to repaying our mortgage so that we own the house, not paying someone elses buy to let mortgage off and owning nothing.

If we don't manage to move up the ladder for a while, then this is a house that i am happy to live here for a long time to come. It's a 2 bedroomed house so even if we had a child in the future, we have another good sized double bedroom that can accomodate it.

If the OP is considering this then i don't see why they shouldn't do this so long as they make sure that if all goes do belly up and they end up stuck with the house because of a fall in prices etc, that it's a house that they will be happy to live in for the forseeable future.

Renting it out whilst they aren't living in it seems fairly logical to me, it doesn't come across like they're wanting it as a business so even if they only just break even, or have to pay some of the mortgage themselves i think they're still getting a good deal because it's all going to be coming off their mortgage thus making the house cost less of their own money!

I wish that when i was 18, i had thought about buying a house so i had a house that had only cost me £20-28k max (which is what our house would probably have cost 7 years ago). I was too busy going out, getting drunk and suffering with hangovers to bother about doing something to make my future living easier (and cheaper lol)!

So long as the OP researches everything and covers all eventualities (interest rates going up/having to cover some of the mortgage themselves etc etc) before going ahead with buying a house then i would definitely say that it was worth doing.. in my opinion of course.

Smiiithy

I'm also doubtful that I would be able to cover the mortgage and other costs from rent, but this would reduce the cost of paying the full mortgage myself, in effect I would be paying my own mortgage in advance. Surely this would be a lesser cost than moving in now?!

I would be hoping to put a deposit of around £10k down, I'm not on a high income which could prove a problem when getting the mortgage - but the low cost of living at home with my parents means I hopefully could contribute a reasonable amount to the mortgage.

I wouldn't necessarily gain profit from the property, but there is nothing to suggest the housing market as a whole should go dramatically down.

So could this be a good way to get on the ladder and possibly change property before I actually move out?

Or would I be better saving my pennies ready for a bigger deposit and funds to renovate?

mooseepoo

If you could, provide some details about what you do, how much you earn, where you live, where you are thinking of buying etc. That way, one of the qualified mortgage advisors who frequent the boards could give you some more advice based on your circumstances. Saying that, most people on this forum could give you advice in some way.

Smiiithy

I'm looking to buy in Northumberland - particularly Blyth Valley or Wansbeck.

The flat would be anything rentable that is for sale - so that I could rent this out and then sell when I plan to move out - moving on to my own property.

I earn £16,000pa working in administration and would be the sole participant in getting and paying the mortgage.

Living at home I would consider myself to be a decent money saver and could sacrifice just over 6k per year towards renovation, mortgage and other related fee's.

In order to put down my planned £8k-£10k deposit, it would be unlikely I could afford more than 6k on renovation or improvement.

lynzpower

I know the area(ish) and I dont think its a bad idea

the only reservation I would have is that if you cannot get someone to live in it ( and I lived in the NE for a while, so have an idea of rents) this could, be the problem. there could well be plenty of other places cheaper, and if you dont get the money month on month, could you afford to keep it going?

Quick nosey shows this
http://www.rightmove.co.uk/viewdetails-12635027.rsp?pa_n=1&tr_t=buy

Would you have any mates who might want to live with you as lodgers? Which might not be a bad idea??

Smiiithy

Given the investment I'd be making, in relation to my income and avilable saivngs - no, I wouldn't. But I am in a secure position and can't see any foreseeable reason for me to ever be out of work or a lesser income.

Claire_DC

Smiiithy wrote:

I'm also doubtful that I would be able to cover the mortgage and other costs from rent, but this would reduce the cost of paying the full mortgage myself, in effect I would be paying my own mortgage in advance. Surely this would be a lesser cost than moving in now?!

I would be hoping to put a deposit of around £10k down, I'm not on a high income which could prove a problem when getting the mortgage - but the low cost of living at home with my parents means I hopefully could contribute a reasonable amount to the mortgage.

I wouldn't necessarily gain profit from the property, but there is nothing to suggest the housing market as a whole should go dramatically down.

So could this be a good way to get on the ladder and possibly change property before I actually move out?

Or would I be better saving my pennies ready for a bigger deposit and funds to renovate?

It seems to make sense to me!

How much could yo get a house for? If you're worried that you won't get a mortgage offer high enough for what you need then it might be worth having a look on the alliance and leicester website to check out their mortgage calculator. This is who we have our mortgage with as they seemed to give a higher wage:mortgage ratio and the interest rates were quite good too.

Basically, because i have a couple of debts to pay off, we got the mortgage in my boyfriends name only so that i wouldn't be linked to him financially for now as i didn't want to risk it affecting his credit score. Therefore they only had the one salary to base a mortgage offer on. We had 11k deposit given to us as a gift to help us onto the ladder and got a 64k mortgage (over 40 years but that should be coming down to 15-20 years in 5 years due to overpayments/salary increases etc).

I wouldn't rely on being able to change property before you move in as you don't know if circumstances will allow that, ie prices may have gone up too much for you to move into a much better house, they may have even gone down which could leave you with negative equity in the current place, or your salary still may not allow you to move to a house that is worth more. I would recommend that you look for a house that you would be happy to live in for the forseeable future, just in case you end up having to do so!



Edit: Just had a look at alliance and leicester myself and for 16k salary, over 25 years with a 10k deposit (i have put postcode NE) you could get a 77k mortgage, over 30 years 81k and so on up to 87k for a 40 year term!