Buying a house with no income?

bodmil

I know the title should be a bit of a laugh for most, but I wanted to see if there was any options available to me. My situation is that I currently have a pretty well paying job (38k this year) and I have been aiming to get on the property ladder while the prices are lower than usual.
I have a plan to quit my job and go back to college. By the time I quit will have between 55-75k sitting in the bank for a period of 3 years, until I graduate and start on around 20k. My course is fully funded and a get enough of a wage to live on throughout the 3 years so I won't need my savings.

My initial thought is that it's just asking for trouble by potentially not being able to keep up repayments. But is there anything at all I can do in this situation, ie buy somewhere and rent it out to cover the mortgage?

poppysarah

If you can buy somewhere for 55k then yes.

Tiny terrace sold near me recently for 30k. Think it'd been on for sale at 60k.

suisidevw

Depends where you live and what sort of property you want to buy?

DVardysShadow

OK, the arithmetic. You could do it if you could cover the mortgage and withstand voids with no rental income.

If we assume £65k savings and you spend 5k on the process of buying, you have £60k. Suppose you took a mortgage of £80k, you might pay back £15k over the period, so you could keep that amount of savings and put £80k mortgage and £45k savings towards the house. You would need to check my figures and decide what level of interest rates you would want to cope with and decide whether to factor in any rental income.

But would you really want to be a Landlord? It is hassle. You may as well buy somewhere where you intend to study, unless you intend to live in it after you have finished.

Cannon_Fodder

If you might rent it out to pay the mortgage, where will you be living? If paying rent somewhere else, and it will be covered by your fully funded course, then you shouldn't have a problem meeting a mortgage of the same monthly amount.

Get a fixed product for the length of the course, so your outgoings won't change...and a year or two on top, in case getting a job is harder than expected.

bodmil

Originally I had planned to buy a 3-4 bed house and rent to lodgers so being a landlord has always been in mind. Now I would buy 2 bed flat and rent it completely. My current and future work is at sea so I only need accommodation for a few months a year so it's but more sound to share a house for that time.

I rather hoped the immediate reaction would be a big NO so I could get it out of my head! I'm not 100% of the training salary but it's about 150 a week, with 4 months a year in the UK, so 8 months you don't spend any of that. I suppose that would cover interest only payments?

It's tricky, I've worked so hard so that buying a house would have the lowest LTV and rates possible, and now I could be doing it by the skin of my teeth.

westv

How is it buying a house with no income when you also say you'll get enough of a wage to live on throughout the 3 years you'll be studying?

bodmil

I'm used to 38k, 5-6k feels like nothing! It'll be gone by the end of the month if during my college time so it's effectively not there. Basically I don't want to rely on such a small amount to pay off the mortgage. If I get any unexpected expenses then I'm stuffed if I only get a few hundred pounds a month.

martindow

bodmil wrote: »

I'm used to 38k, 5-6k feels like nothing! It'll be gone by the end of the month if during my college time so it's effectively not there. Basically I don't want to rely on such a small amount to pay off the mortgage. If I get any unexpected expenses then I'm stuffed if I only get a few hundred pounds a month.

Are you sure you are cut out to be a student?!

bodmil

I'm sure I'll be just fine.

suisidevw

Buy a house for £60k then with your cash. Live mortgage free