Ftb ... Btl!!!

cordial

Is a first time buyer mortgage obligatorily for owner occupation only? Someone asked me the question the other day and I had no idea of the answer.

They are living quite happily with their parents and have no intention of changing... but they want to buy a property for investment purposes and have never bought before.

toonfish

cordial wrote:

Is a first time buyer mortgage obligatorily for owner occupation only? Someone asked me the question the other day and I had no idea of the answer.

They are living quite happily with their parents and have no intention of changing... but they want to buy a property for investment purposes and have never bought before.

buy to let is OK for a first time buyer, but they'll need 15% deposit and nnot all the lenders will do it

herbiesjp

You can indeed get FTB BTL mortgages.

Most of these have higher minimum ages at entry though.

It will also depend on the expected rental incoem on the propert as to how much a lender could agree for your friend

HTH

PoorDave

You could also make sure your friend knows that now might not be the best time ever to get into such a thing, as prices are very high. Make sure if they do it they're doing something that's profitable even in a static market i.e. not relying on making the money purely through capital gain, which might not occur.

A_Nice_Englishman

Starting a property rental business is like starting up any other business. You need a business plan. The mortgage is only a part of this.

Do void periods, bad debts, repairs, redecoration, legal fees,insurance, agents fees, costs of evicting bad tenants, rises in interest rates to, say, 8% and possible falls in property values figure in their business plan?

Are they familiar with the 50 Acts of Parliament and 70 sets of regulations which may apply?

Then they need to look at the taxation side. Any profit they make will be taxed at their highest rate of income tax and when they sell they will have to pay Capital Gains Tax (assuming they sell at a profit, of course), though there may be reliefs.

I am selling a property which I used to rent out as I decided I would be better off keeping the money in the bank. They need to decide whether or not to borrow the money. If they feel that property is still a good investment they may be better off buying a house to live in themselves. At least that would avoid the CGT problem.

LizEstelle

Would such a person necessarily have to get a BTL mortgage as such or could they legally be considered as a first time buyer (with whatever kind of special deal that implies) without using the property as their own residence?

hornetgirl

LizEstelle wrote:

Would such a person necessarily have to get a BTL mortgage as such or could they legally be considered as a first time buyer (with whatever kind of special deal that implies) without using the property as their own residence?

I think you would be obliged to inform the mortgage company that you were letting the property. Most lenders would probably then insist on a BTL mortgage or charge a higher interest rate, though I'm sure there would always be exceptions.