First Time Buyer But Looking To Rent It Out...

jdw88rm

Evening!

New to the forum so hi!
I'm 24 and looking to buy my first property within the next year or so.
I'm in the forces and live at home with my parents when I'm not away/on base so would be looking at renting the property out having the occupant(s) paying some, if not all, of the monthly morgage re-payments for me.
Any help/advice off you guys would be very much appreciated as this whole subject is completely alien to me so am in need of knowing where to start etc etc.

Many thanks!

Werdnal

This is where to start:

http://forums.moneysavingexpert.com/showpost.php?p=41160642&postcount=12


The initial things you must be aware of are:

If the property is a flats they are usually leasehold, and lease may prevent letting.
You will need a BTL mortgage, with 25% minimum deposit.
You will only be able to offset the interest on the mortgage against tax on the rent you receive.
There are other costs involved in letting, not just covering your mortgage!
You must abide by all the legislation, H&S and obligations of being a LL, and if you are likely to be away due to your postings, employing a good letting agent to handle the property, tenants and maintenance issues is wise.

Once you have read the above link, and all the links it contains, if you have specific questions, come back and ask again.

ACG

Werdnal wrote: »

You will need a BTL mortgage, with 25% minimum deposit.

That isnt strictly correct.
With a BTL mortgage you wouldnt be able to live in the property.

You would need a residential mortgage and then obtain consent to let from the lender - HOWEVER, the lenders will only issue this at their discretion. Nobody can say for sure whether they will allow it or not.
Also when looking for a mortgage you might want to consider what happens if you do obtain consent to let (ie some lenders charge a fee, some increase the interest rate and some will do neither or both).

Also how long were you looking to rent the property out for? I think most would want you to be lettering the property on a shorthold basis which is typically a 6 month contract and then rolling after that.

This may potentially be more difficult than you think. Ive never had to look into this so i cant say for sure but i dont think every lender will accept this - presuming your being honest from the outset.

Werdnal

ACG wrote: »

That isnt strictly correct.
With a BTL mortgage you wouldnt be able to live in the property.

You would need a residential mortgage and then obtain consent to let from the lender - HOWEVER, the lenders will only issue this at their discretion.

OP has indicated they live at home with parents or on base when not away on duty. Therefore if they are looking to rent out from the start they will need a BTL mortgage! You cannot buy on a resi, then immediately apply for CTL as lenders will be suspicious and very unlikley to allow it, especially with OP being a FTB.

Of course, if their intention is to live there first, then obviously a resi mortgage would be the first step, but even so, many lenders are shy of allowing CTL so soon after buying the property, and this may scupper OP's plans to let it.

kingstreet

Many lenders allow service personnel to take a residential mortgage and let the property from day one. There was an article a few years ago slating firms which wouldn't, Northern Rock being one IIRC.

A broker specialising in armed forces mortgages would know the answer to this immediately.

http://www.mortgages4forces.co.uk/documents/Mortgages4Forces.pdf

Page 17;-

Permission to Let
This where a lender will be prepared to lend on a ‘Residential’ basis, that is to say, a more favourable basis than a BTL basis – allowing you let the property because it is your ultimate aim to have it as your main residence but, due to Service responsibilities – postings etc, you cannot yet take up residence. Not every lender will offer this option.

No recommendation of the broker in this example is intended.

ACG

Werdnal wrote: »

OP has indicated they live at home with parents or on base when not away on duty. Therefore if they are looking to rent out from the start they will need a BTL mortgage! You cannot buy on a resi, then immediately apply for CTL as lenders will be suspicious and very unlikley to allow it, especially with OP being a FTB.

Of course, if their intention is to live there first, then obviously a resi mortgage would be the first step, but even so, many lenders are shy of allowing CTL so soon after buying the property, and this may scupper OP's plans to let it.

My mistake, i misread the OP. You are correct.

jdw88rm

Thanks for your replies guys!
Alison - I just want to get a foot on the ladder ASAP really.