Any chance of getting a BTL?

juniorcityboy

Hey guys, hope you can help with this

I'm a graduate in my early 20s, living at home and work in a reasonably well paid job in financial services in the City of London. My basic pay is around £27k a year but I get periodic bonuses which can push my income anywhere up to around £35kpa

Basically I want to get onto the housing ladder, but am happy living at home and to be honest I would quite like to get a BTL property. I realise being a landlord is not a get-rich-quick scheme by any means, but nonetheless I would like to get involved in property. Also being young means my income should (hopefully) rise over time, and with no wife/children or rent to pay my outgoings are very low at the moment.

Deposit-wise, I have a deposit of around £19,000 - some of the money I've saved up myself, however most of it is money my parents saved for me since I was born and I've only just (as of last week!) been told this money exists and will be given to me to spend as I choose since my parents feel I'm now "of age" enough to handle the money. I feel using the money to invest in property's probably one of the better ways to spend the cash!

The only downside, however, is I do have a few debts I owed a fair bit on credit cards, which I've recently consolidated into just one personal loan circa £10k. However, I anticipate to have a (low) four-figure bonus coming up in the next 2-3 months which I will use to clear a chunk of this! (Edit: forgot to mention my credit rating should be very good as have never missed a payment on any credit card, mobile phone bill ever)


So basically guys, would I have any chance of getting a BTL mortgage of £100k or so on a £120k property?

thanks in advance

Yorkie1

I am not an expert but I think it likely to be difficult.

I'd expect that your outstanding loan will be taken into account in assessing circumstances / affordability. And any marks on your credit report will count against you.

And I think most BTL mortgages require a lower loan to value ratio than a residential mortgage - can't remember whether it's 75% or 85% which is often cited on here, so your £19K has to cover more than you might have expected.

Out of interest, would the property be in London or outside? If outside, you will in all likelihood need to get someone to manage it for you, which will cost you a % of the rental income.

Then there is the question of whether you may need the money in the next few years. Your job could change at any time, you might meet someone and want to settle down. Your ownership of this property means that you won't be able to get stamp duty exemption on any later property. Property prices are not going to rise significantly in the short term, so you may not get back what you put into it. I think there are significant risks in what you're considering.

DannyboyMidlands

For the same reasons outlined by Yorkie1, I think that you'd be better off saving the money for when you eventually buy a place for yourself to live in. You could stick £15k with NS&I paying RPI + 0.5% tax free and use the rest to make a start on clearing that loan.

shortchanged_2

Are you looking to buy in Loondon because I doubt you'll even be able to buy a garden shed in the capital for £120,000.

kingstreet

You'll struggle to find a BTL lender who will lend to someone who isn't already an owner occupier.

The Mortgage Works, for example;-

First time landlords
Buy to Let new business products are available for first time landlords (for purchase only), classified as applicants who have not owned and let a buy to let property for the last six months.

Subject to:
Max 75% LTV (customers purchasing over 65% LTV must choose from the First Time Landlord range).
First time landlords must be owner occupiers (with or without a mortgage)
The applicant(s) must have owned their residential property for at least 6 months at the time of application
Loan purpose: to purchase a new buy to let property

maninthestreet

Pay off your debts first, before taking on even more debt.