First Time Buyer - Buy to Let?

NimrodNav

Hello,

I'm looking for some advice regarding purchasing a BTL property.

I'm 29 and work as a school teacher on £27500, I was made redundent from the RAF a few years ago, so have a sizeable deposit (total 50k+).

I live in a subsidised property owned by the school, which is a large house I share with another teacher, for £225 per month.

I'd like to get on the property ladder, but don't really want to move from my current house as the outgoings are very low, I've neither the time nor the inclination to run a BTL property myself (school commitments), and don't want really to pay a company to do it.

My retired parents who live near Inverness have suggested they could run another property for me (they already have a BTL). We have found a 1 bedroom flat in the area for around £90000 which would suit.
The rental income would cover 125% of the mortgage payments.

1. I've read on the forums that many lenders require you to already own your own property, is this the case? What if you don't?

2. I've been looking at BTL mortgages, 2 Year fixes are cheaper at least initially than 5 year fixes - is it generally accepted that interest rates will rise over the next few years?
Does this mean the 5 year fix mortgages are sensible options?

3. Are there any companies I should consider approaching? (rather than just the cheapest).

Thanks for your help!

ACG

1) It is yes, but there are a couple (not many) exceptions.

2) Rates are likely to increase within 5 years but nobody knows when and by how much. This is one of the things you need to weigh up.

3) I would just go to a broker, you wont be getting the cheapest BTL purely because your not a residential home owner. So you need to really go with what is possible rather than what is cheapest. You will struggle with this without the help of a broker.

NimrodNav

Solid advice, many thanks.

glosoli

Consider clydesdale bank

They perhaps don't have the lowest BTL rates (5 year fixed 4.49% LTV <70%) but they don't have an issue with not owning your own home.

Porcupine

Been having thoughts along similar lines as the OP. Haven't run all the numbers yet so I won't bore you with the details (but headline figure would be maybe 50-60% LTV), but one critical factor in my decision would be having the option to live in the property if circumstances changed.

Are there BTL mortgages where this is possible without punitive repayment fees? After all, BTL rates are almost double what owner-occupier rates are.