What would you do?!

Jixon66

Ok... I'm 22 and live at home with my parents. My salary is £23k and save £500 a month. I haven't received any help from parents or family, what I have is what I have earnt so I appreciate it a lot more (Thought I'd get that in!)

I have recently purchased a flat for £66000, I paid 5% deposit, interest only mortgage. The flat is nice however I wouldn't live in it myself. I am going to rent the flat out privately for 6 - 12 months.

My question is... Am I best off over paying into this flat or should I save the money in an ISA and then use it as a deposit on a property/flat for myself? I am hoping to purchase for myself in 1 to 2 years? Would mortgage companies be helpful in giving me a mortgage on another property?

Kind regards
Daniel

simonjfisher

I would think your idea is a good one. By paying it into an ISA you will still have access to the money which could help you if the flat was empty for a period.

Most lenders will be happy to give you a mortgage on another property if the flat rent is covering the mortgage on it with a bit to spare.

You obviously didn't buy the flat with a buy to let mortgage. It would benefit you to be registered as living there at least initially to help save on a potential Capital Gains Tax liability when you come to sell it. As it stands, there would be no tax payable within 3 years if you have lived there as your main home.

Hope this helps!

Jixon66

The mortgage was a standard interest only mortgage, sadly I didn't have the 15% - 20% needed. I was told that as long as the payments are made, there shouldn't be any problems.

What is the best way to register that I am living there? Bank account etc?

Of course, my wishful thinking is good... As long as I don't get married or kids etc!

Kind regards
Daniel

simonjfisher

Bank account, utility bills & council tax are generally good enough to prove you're living there. Only problem will be that you won't get 50% off your council tax bill for an empty property just 25% single occupier discount.

You're right in saying that as long as you make the payments there shouldn't be a problem.

Debt_Free_Chick

For the purpose of having the flat accepted as your Principal Private Residence you must actually occupy it. It's not sufficient to simply "pretend" it's your address, for the purpose of bank statements etc.

Also, it will not count as your PPR if you bought it with the intention of letting it.

Suggest to check the Inland Revenue website for complete guidance on this.

dougk_2

I would check your mortgage too. Some lenders will not let you rent your property or will increase the standard rate. You need the mortgage companies permission to rent it out. Make sure you get this in WRITING.

You also need to have sufficient insurance, not a standard household policy but a landlords one.

Why not move into the property for 6 months or so and then take things from there. It is best not to leave the property empty for obvious reasons.