To buy an apartment in manchester help?!

timmymeads

Hi, myself and girlfriend are looking to buy the apartment we are currently in. I am waiting on a offer, i feel its going to be around the 111k mark. We will have around 20k savings by april (end of rental agreement) We was going to save for another year and buy a house but i thought instead of have dead money on rent why not mortgage the apartment and live in it for a year then rent it out through an agent. In this time of living we could save another 12k and buy an house. This way we will have two houses?

My questions are:

Would we be able to get two mortgages?

If i was to switch my mortgage from fixed 1 year to a buy to let would they be able to give me a 90%/85% mortgage as i cannot find any on the web.

I was looking to put 10-15% down on deposit you see, are there any other options anyone can suggest?

I am sure we would have tennents as its litterally in the middle of city centre and rental income will be around £680-£700 a month.

I appreciate people looking at this,

Thanks Tim:cool:

cattie

I believe with buy to let you need at least a 25% deposit, but am sure somebody else will correct me if I'm wrong.

Prothet_of_Doom

So you'll have a normal mortgage, and you'll want to convert it to a BTL, and the equity in the flat at that point in time will need to be ? 25% 40% I'm not sure, but I guess the lower it is the better for your plan. Any maybe the valuation in a year will show an increase.

And you'll also need a deposit on your new place, of what ? 15% ?

If you can save the deposit(s) then it's doable.

timmymeads

Yup, i reckon it will go up in value - I will be able to save another 12k i think or atleast 10k - I will be paying off my mortgage aswell so it shall go down. I am not concerned about getting anybody to live in it rental. I spoke with a finiatial advisor and they said there shudnt be a problem given u can prove to the bank u can secure the rental on the current place in order to buy a new place! I will have to put something like another 15% down so ill need to get saving!!

Any other suggestions?

Prothet_of_Doom

I like to do a best, worst, and most likely case decision map on excel.

Worst case ? You are stuck with a flat that isn't your long term home, but not wasting money on rent.

Best case ? Flat value goes up, rents go up, you can save more than you think, and it all goes great.

Most likely ? It takes longer, and is more stressful and painful but you get there in the end.

timmymeads

I love a food excel sheet thats how we got all our savings lol! money budgeting!!

i think if i save 23k 20% deposit then live in it for 2 years take the mortgage down - Then remortgage buy to let and hopefully prices will go up, going off my research, fees for renting landlords i will just break even each month! Save for the 2 years we are in the flat and then have enough for new place!

Mattygroves2

Have you checked how much the service charge will be ? That might be high enough to make the yield too low to bother renting it out in 2 years time.

pleasedelete

manchester apartments have not performed well in the market over time compared to many other areas! Too many and too samey.

Is your landlord renting because they couldnt sell at a price to cover their mortgage?

Are you sure it will increase in only 12 months. Stamp duty is a big barrier to prices and will be a cap -much less likely to go above £125,000 over time.

If and it is a big if it went up to £125k in 2 years then you would still need to add cash to get to a 25% threshold plus buy to let fees are quite high.

agrinnall

Your repayment mortgage will go down by a negligible amount in the first year unless you are overpaying by a significant amount. I feel you are going to struggle to have enough equity in the flat to be able to convert to a BTL.

ACG

The market in Manchester is doing quite well at the minute, i would be relatively confident prices would increase if they carry on like hey have over the last 6 months. The demand seems to be there.

Obtaining a Mortgage on the residential mortgage might be ok, you may be able to get consent to let on that property in 12 months time but there is no guarantee it will get accepted. If not then you would need 20% equity (although ideally 25%) in order to get a BTL mortgage on that property - so it really depends on the risk you want to take.

timmymeads

Out plan is to see if we can rent for another 6 months from april - We will then have around 25k

23k deposit (20% deposit on norm mortgage for 2 years fixed)

save within these 2 years for another mortgage on a house

move into this house and convert old mortgage to a btl

this way i feel we will be eligible for 25% btl mortgage as will will be under that amount?

Service charges and ground rent in around £1.2k a year and then fees from letting agent for tennant around 1k a year i think