another property - raising deposit

25ben

situation:
own 2 bedroom property worth 160-170k
mortgage at 4.89% on £108k fixed for 4 more years, repayment, £640 a month
rent it out for £600 (to family)
currently living for free myself
£2k in the bank
doing temporary jobs so no proof of income or proper salary

want to:
buy another property on a buy to let mortgage with 10-15% deposit, so i will need about £15-20k to buy a 1 bedroom at £130,000 for example
so i need to raise some money
am tied into mortgage on a good rate so can't remortgage
cannot get secured loan on the property as i dont have a guaranteed salary

questions:
can i get an unsecured loan in my situation?
any advice what to do- really want the second property.

Generali

In your position I'd:

1. Learn about and understand cashflow

2. Learn about bubbles and why the current market for just about all assets is the result of a credit bubble

3. As a result of what I've learned, do not get a BTL.

As a little coda to this, if you follow #1 and find a place that generates positive cashflow then buy the sucker. You'l be doing well if you do though.

nelly_2

why do you want to lose 40 quid a month?

I know its not the end of the world but its deffinately going in the wrong direction no?

25ben

well it is a repayment mortgage but i am going to change to interest only to reduce payments by £200 a month. therefore I would be making £160 profit then.

what i'm asking is how easy is it to get a loan of say £15,000 with shady income?

meanmachine_2

What's the yield on the second property?

Also, you're talking about borrowing to make up what will effectively be a 100% mortgage.

In the present rental market you'll be making a big loss, I suspect.

And with no regular income to help you through any shortfalls, you could lose both properties.

silvercar

1. try getting 100% loan on new property, there are some lenders who will do that apparently.

2. Ask your existing lender if they will increase your mortgage on current place; if its only for a small amount they may not want to do a full application/ credit check especially as you have loads of equity in it.

3. Even with no secure income there are people (watch day time TV) who will lend you money as a secured loan.

25ben

i estimate the yield will be about 5.5 % on a one bedroom at 130k, rented for 600 / month

or 6% on a 2 bedroom at 160k rented out at 800/month

does that sound reasonable?

25ben

i must also mention i have some money as backup which will be available to me in around 6 months that will pay back the loan in full

can you pay back a loan fully before the term ends?

or do you need a special flexible loan to do this and avoid and early redemption fees?

yes i could wait til i get hold of this money but i want to buy my 2nd property asap

thanks for help

Meatballs

Are you sure you will be able to get 800 a month on a 2 bed flat? The flat I'm living in is 575 (Bristol).

How are you going to afford it if you struggle to find a tenant/unexpected costs?

meanmachine_2

£800pcm for a 2 bed flat on the market for 160k?

Hmm, unlikely, I'd have thought.

What area are you looking at?

mac676

No point loaning the deposit if the rental yields are naff unless:-

1) you can afford the cash flow defecit, 2) the yields are likely to grow faster than elsewhere in the country and 3) the capital growth outstrips what you are losing in terms of cash flow.

Personally would look for a property with genuine money off then remortgage to higher value.

Don't accept credit bubble argument. House prices are going up because shortage of amount required. If you lose money with houses now its because you paid too much for it in the first place.