Should I get a buy to let?

chris163

Hi

I have just sold my car and im contimplating getting something a bit more modest and buying my first property.

Basically, I work for the family letting agency, and am 21, still living at home.

I have saved about £15k and also have a seperate house deposit which I can get hold of in about 3-6 months time.

I took a personal loan out for my car for £12,000 and put £3k in cash, so effectively, I could buy a more modest car and have £25-30k cash to put into a buy to let.

I can buy a 1 bedroom terraced house for £129k which I can get a rental income of around £595-650 for. I also can pretty much guarantee tenants due to my job.

Would it be feasible for me to get a buy to let on this basis?

My credit rating is 'excellent' and I have a score of 966/1000 from experian as of today.

I also have no other loans on credit cards etc. apart from this personal loan for my car.

Any advice majorly appreciated!

chris163

lol hello?

illmonkey

Speak to a Mortgage/financial adviser. Do you need a car ASAP? I would maybe put it off for the application (it will count against the mortgage) and to see if you actually do need one!

You seem in a good position, quite a good deposit. Also, i can imagine you'd get a discount or FREE rate from the place you work to advertise, so you're saving more there.

What is your salary, most places are offering UPTO 5x your salary, this is for standard mortgages though, im not 100% if its as important on a "buy to let"

imoneyop

For a buy to let, it is how the figures stack up for the property rather than your credit history.

B2L lenders will want to see that the rent is 15% - 30% (depending on the lender) over the interest amount and will only lend 85%.

On the figures that you quote (assuming you took a 100k mortgage) then you are well within the rent range and your deposit would also be well over the required 15%.

The only slight limitation is that a lot of B2L lenders want you to have been a previous home owner and will look for proof of an existing mortgate (or one that has been paid off recently)

chris163

Hi

Thanks for your advice so far.

I am on a basic of £23k and can proove my earnings as being around £35-40k with pay slips.

As its the family business, I could in theory show my basic wage as being higher if this helps my situation.

My previous P60 for my last job shows £29k and I have been within my current employment for about 6 months now. In total, I have been employed 4 years full time and earning min. of £23k a year.

We run a couple of cars within the business which are privately owned by my family. I can use these without any problem so hence why im considering this route....obviously i will have to buy a car eventually, but for a few months it could work well.

I have some savings currently invested which I cant really get hold of until May/June due to interest purposes. From this, i plan to buy my own property (should give me about 30-35% deposit on a £180,000 property) and a car.

What would your recommendations be? Are you aware of anywhere that offers buy to let mortgages to non home owners?

What I could even do is have my parents stand guarantor on the property?
Im certain they wouldnt have a problem with this

I am really concious of house prices rising up and up and want to get a foot on the ladder + try and build a portfolio of properties up in the long run.

Cheers!

missile

You will no doubt be aware of the pitfalls in property letting?

I would suggest you go for a two bed and let out a room. Thereby you can keep a close eye on your investment and you can legally avoid paying tax on the rent.

I never got a 15% on my rental properties. 7-10% return is more realistic

toonfish

there are a few lenders that will do buy to let for a first time buyer and your income is mainly irrelevant - it depends on how the rental income stacks up against the mortgage repayments.

It would be worth you speaking to an experienced broker because in my opinion it is getting quite difficult to make buy to let stack up now, although this obviously depends on local property prices

herbiesjp

BAsed on lookinat buying for £129k, putting down £20k deposit, borrowing £109k and getting a rental income of £595 -650pm you should be ok in terms of the figures stacking up.

Your income is fine as it meets the minimum income requirements of most lenders.

All you need to do is find the right lender that will allow a FTB to get a BTL

HTH

chris163

cool thats great news - but as luck would have it i have just been offered a very good buy on a place.....

£115k for a studio flat in a very popular location (only 12 available)

valuation is around £120-125k but hes a landlord after a fast deal - and i can buy direct from him without charging him through our business without agencies fee's affecting him etc.

Rental income - £520 P.C.M. (tenant in there already)
Unfurnished, or £560-580 furnished

Ground rent - £160 per quarter

If I put in say £15k into this, would figures still stack up? I can afford a half decent car then lol

herbiesjp

Just be careful as going for a studio flat can limit the lenders available

imoneyop

On those figures it's going to be a bit tight.

100k assuming a rate of 5.75 (which is probably low) gives interest of 480ish.

For this you would need a rent of between 550 and 622 depending on the lender's requirements.