BTL Mortgage

THFC123

Hi All,

Hopefully somebody can help. Me and my brother have been left a 2 bed bungalow which is worth approx £180k and could be rented out for approx £600 pcm.

I think we could earn more money if we could take out some of the capital from the bungalow and use it to buy 1 or even 2 more properties and rent them out as well.

But having a look on the internet all the BTL mortgages you need to be 25 or older to get them. (I am 23 and my brother 20) Neither of us have any other debts (i have a credit card paid off each month) i earn circa £35k and my brother £20k.

How possible do you guys think this would be?

Also do we need a BTL mortgage if we are to rent out the property, could we use a normal mortgage?

Thanks in advance for your help!

Thrugelmir

A gross income of £600 pcm equates to £7,200 pa. If the property is worth a £180k as you say. Thats a gross yield of 4%. Not exactly a good return on the capital.

Why not sell the property. Split the proceeds and use it to each buy your own first properties. May prove a far better investment.

Invest in BTL when you older and more knowledgeable. Time is on your side.

brit1234

Not a good idea if prices are falling, you will loose equity quicker if it is thinned out over a few properties. Better off selling for your first homes.

THFC123

Thanks for both your responses - but unfortunately we cannot sell the property until my brother is at least 25 so have it for at least another 5 years. I know the yield is really low - hence we were looking to try and increase the income from it by purchasing at least another property with a higher yield.

Being given the bungalow has come completely out of the blue really, so were both of the opinion that treat it as a bonus and continue to save for our own properties as we were before. But were not sure we are going to be able to get the capital out of the bungalow to get another property.

herbiesjp

It would have to be a BTL mortgage.

It could be done with some lenders.

However the £600pm will limit the amount of equity you could take out of the property.

If you are 100% certain you want to go ahead (after looking at pros and cons), you would be better off talking to a good whole of market adviser.

THFC123

Thanks for all the responses. I agree we need to do some more research to make sure it is the right thing to do, and we're in no rush so will look / wait for the right opportunity. I think I will arrange to meet an advisor to see what they think we could raise.

Does anyone have any rough ideas what we could raise with rent of £600?

luckyfool

You could probably raise about £115k on a Buy to Let based on £600 pcm rental.

Typically as well as minimum ages of 21 or 25, you also face issues with BTL lenders a) wanting you to have had a mortgage before or currently, whether BTL or residential, and b) generally they will look for you to have a minimum income of £25k to £30k.

Trollfever

but unfortunately we cannot sell the property until my brother is at least 25 so have it for at least another 5 years.

Speak to your solicitor about doing a Deed of Variation of the will.