mortgage questions

stuart888

Hello again all. Hello again all.

As previously stated I'm a young man wanting to invest capital in the buy to let market. to invest capital in the buy to let market. Further to my previous position my savings Further to my previous position my savings now amount to 25k and I hope to have saved now amount to 25k and I hope to have saved 30k by Christmas. I also have all my own tools 30k by Christmas. I also have all my own tools and equipment. I would like to gauge opinion and equipment. I would like to gauge opinion on the following questions. on the following questions.

1. HHow much of a problem is it that I live with my parents and am not a homeowner. my parents and am not a homeowner. Ironically this is why I am able to save so much Ironically this is why I am able to save so much on a modest salary but it seems to be frowned on a modest salary but it seems to be frowned upon by lenders. upon by lenders.

2. MMy kneejerk solution to the above would be the follwing: Obtain reidential mortgage-the follwing: Obtain reidential mortgage-renovate using ecess salary/interest free credit renovate using ecess salary/interest free credit card-convert to btl mortgage using savings or card-convert to btl mortgage using savings or capital appreciation from works.is this capital appreciation from works.is this possible/advisable? possible/advisable?

3. If the above is possible would it to be 3. If the above is possible would it to be feasable to do this several times. So on an feasable to do this several times. So on an typical property value of 80k put down a 10% typical property value of 80k put down a 10% deposit of 8k, use a combination of excess deposit of 8k, use a combination of excess salary and interest free credit cards to pay salary and interest free credit cards to pay fees/renovation costs/mortgage whilst fees/renovation costs/mortgage whilst unoccupied, remortgage with higher equity unoccupied, remortgage with higher equity after renovation or input some capital from after renovation or input some capital from savings, then get a second residential savings, then get a second residential mortgage at 8k and repeat the process untill mortgage at 8k and repeat the process untill my 30k capital is depleted? my 30k capital is depleted?

Naturally I plan to discuss this with an IFA at Naturally I plan to discuss this with an IFA at some point closer to taking the plunge but some point closer to taking the plunge but would like some idea of what is and isn't would like some idea of what is and isn't feasible. feasible.

Any other suggestions for someone in my Any other suggestions for someone in my position to invest in property very welcome. position to invest in property very welcome. Hope this makes sense and have mercy on me!

R_P_W

Why say everything twice?

R_P_W

Your plan won't work.

Most lenders won't even entertain a BTL who isn't already a home owner. Even if you got a residential mortgage and then looked to convert to BTL - where is the 25% deposit coming from?

I suggest you re write your post into English that most people will understand. Reads like rain man at the moment!

stuart888

I have no idea what happened to that post! Let me try again!

The houses I'm looking at sell for about 80k. I have 25k in savings and will probably have 30k when I decide to buy so this covers my 25% btl deposit of 20k. As its difficult for non homeowners to get btl irrespective of having a deposit and those that don't require this have high rates I was speculating whether I could obtain a residential mortgage at 10% or 8k, renovate the property and remortgage on a btl using either my remaing 22k capital or the equity gained from renovation or a combination of the 2.

If this is possible I'm wondering if this could be done again
Should I have sufficient capital left as I would no longer have a residential mortgage

Answers much appreciated?

melj16

Natwest will do BTL for someone who is not an existing homeowner

ACG

There are a couple of lenders who will do mortgages for none home owners - not many but its not impossible to do.

Why sit down with a Mortgage Advisor (probably a better option than an IFA) last minute, why not do it first thing and let them help you to plan so you can sort out what you will do going forward.

stuart888

Acg

As a mortgage advisor can you say if I chose to get a residential how easy is it to convert to a btl mortgage considering ill have cash and hopefully increased the value of the property by a 5 figure sum?

Maybe ill get to an advisor sooner I've just been mulling things today and wanted some feedback from folks on here!

ACG

If you take out a residential mortgage you will be tied into a deal - which then means you would have to request consent to let (CTL) from the lender... they do not always grant this. Its best doing it right from the outset so your not tied into something you dont want to be.

stuart888

So it isn't possible to convert it then? If I was to put down a full 25% deposit is it common to use equity release to put towards another property should I increase its value by a significant amount. Can you explain the details of how this commonly works if so?

ACG

25% on BTL mortgages is the minimum, its not a big deposit.

Im not saying it isnt possible, but i personally wouldnt risk being tied into a residential mortgage if your aim is to rent it out. Your relying on the lender giving consent to let. When i used to work for a lender they used to see their !!!! if people applied for a mortgage and then consent to let within 6-12 months and they did decline them on occasions.

stuart888

Hmmm ok

So what do you think about equity release. In a situation where I had put down a 20k deposit and increased the propertys value by 10-15k ( this is the typical differance between run down and newly refurbished properties in the area I'm looking at ) also bearing in mind a should have some capital left from my savings.