FTB/Buy to Let

Trixi

Hello,

Does anyone know if there are any/many lender who will still consider giving a buy to let mortgage to first time buyers (we cannot afford to buy for ourselves at the moment due to high prices in our area).

Also, we are looking at fairly small amounts: houses in the region of £60000, with a £20000 deposit available - are these figures going to be a problem for lenders?

We have one salary that the banks will consider (I am self employed with less than 2 years records and have only a small PAYE income, partner is employed).

I will, of course, be contacting a broker when we are ready to find a mortgage but am hoping for some advice - what are our chances???

Thanks, in advance

Thrugelmir

Owning another residential home i.e. a home is a normal prerequisite of BTL lending. As this gives the lender the security it requires.

shortchanged_2

Are you are looking for a BTL interest only mortgage?

Lenders have now cottoned on to this and have realised that some FTB'ers in particular are trying this route because they can't afford the repayment equivalent. Which is another reason why they are not allowing many Ftb'ers to have BTL mortgages.

Trixi

No, we'd be looking at a repayment mortgage, and more than able to cover the payments for empy periods.

I'd always wanted to look at property letting in the future but wanted to secure our own property first. However, due to the costs in our own area we're considering a buy-to-let property (in a much cheaper area) and continue renting for ourselves.

We would have some savings left as a back-up, would continue to save while the property was rented and could cover empty periods if we needed to.

I think that Nat West offer BTL mortgages of this type but know that many other lenders do want us to already own a property - just wondering what our options might be (if any!).

Thank you both for replying.

GMS

How much is the salary for one of you?

Trixi

£21000 (and my PAYE income is approx. £2000)

kingstreet

Trixi wrote: »

Hello,

Does anyone know if there are any/many lender who will still consider giving a buy to let mortgage to first time buyers (we cannot afford to buy for ourselves at the moment due to high prices in our area).

Also, we are looking at fairly small amounts: houses in the region of £60000, with a £20000 deposit available - are these figures going to be a problem for lenders?

We have one salary that the banks will consider (I am self employed with less than 2 years records and have only a small PAYE income, partner is employed).

I will, of course, be contacting a broker when we are ready to find a mortgage but am hoping for some advice - what are our chances???

Thanks, in advance

You have to be aware that lenders see FTBs looking for BTL products as a way of getting a mortgage on a main residence when their circumstances prevent them getting a residential product.

There may be one or two lenders which will accept an FTB BTL application, but expect serious scrutiny of the application.

Where is the deposit coming from?

Is the rental income 125% (or more) of the monthly mortgage interest, assuming a mortgage rate of around 6%?

A broker would help with this.

lestergun

I'd be interested to find out too.

I'm renting and am happy where I am at the moment. A small flat is for sale in the area. I'd like to buy it so I'll have somewhere to live in the future but have no need for it now. I couldn't get a residential mortgage for it as I won't be living in it and couldn't get a buy-to-let as I don't currently own my own home. Are there any other options?

Thanks in advance

GMS

How much is the flat? What deposit do you have? What rental is expected per month?

bigadaj

There is of course the irony of first time buyers being unable to afford to buy so looking at becoming landlords instead, not a pop at anyone just the irony is so sharp!

Trixi

GMS - thank you so much for your information. The deposit is mainly savings - a few thousand might come from a gift we received from a family member 3 or 4 years ago (it was their way of sharing an inheritance). We do have more than the deposit amount - some will be held as an emergency fund.

Rent payments would be more than 125% of mortgage - on £40000 at 6% mortgage would be ~£260 and rent would be ~£350-£400+ (according to my research so far).

bigadaj wrote: »

There is of course the irony of first time buyers being unable to afford to buy so looking at becoming landlords instead, not a pop at anyone just the irony is so sharp!

Agreed! Though it is genuinely something I've always been interested in as a business (I've never been unhappy about renting and would like to be a good landlord myself), but I can see that lender would be wary and wouldn't neccessarily believe that.