21 Year old remortgage house as buy to let and buy new house?

mt2man

Hey all just wondered if anyone could help me with an idea i have, it probably wont happen for another 2 years or so just wondered if it was plausible at all.

Basically i am only 21 and i own a house in Gosport, Hampshire. I purchased it 2 years ago on a 21 year mortgage i paid £116k for the house and i now owe £86k on it with 19 years remaining, the value of the house now is around £125-130k (id say £124,995 as its on the awkward border or stamp duty).

Ideally id love to keep the property as a buy to let and take the capital out of the house to use as a deposit when i move, does anyone have any information on this? Would it be possible?

The houses i am looking at are around £160k.

My salary is around £20k without overtime (can probably take home around £28k) and my girlfriend wont be on the mortgage and wont really be living with me.

In around 2 years i should be able to have £10k in savings/sellable assets (i own several cars and motorbikes).

Any ideas? Or should i wait till i am older, salary has improved and maybe start living with my girlfriend? Id want to keep my current house solely as mine though.

I know i am probably being very ambitious but a man can dream haha, im pretty happy with where i am financially at the moment considering my age and all my assets and being on the property market at a youngish age. I just aim to be a entrepreneur and eventually get into property and dealing cars full time as its something i really enjoy doing, the financial side just isnt with me at the moment.

Thanks Jack

Idiophreak

mt2man wrote: »

Hey all just wondered if anyone could help me with an idea i have, it probably wont happen for another 2 years or so just wondered if it was plausible at all.

Basically i am only 21 and i own a house in Gosport, Hampshire. I purchased it 2 years ago on a 21 year mortgage i paid £116k for the house and i now owe £86k on it with 19 years remaining, the value of the house now is around £125-130k (id say £124,995 as its on the awkward border or stamp duty).

Ideally id love to keep the property as a buy to let and take the capital out of the house to use as a deposit when i move, does anyone have any information on this? Would it be possible?

The houses i am looking at are around £160k.

My salary is around £20k without overtime (can probably take home around £28k) and my girlfriend wont be on the mortgage and wont really be living with me.

In around 2 years i should be able to have £10k in savings/sellable assets (i own several cars and motorbikes).

Any ideas? Or should i wait till i am older, salary has improved and maybe start living with my girlfriend? Id want to keep my current house solely as mine though.

I know i am probably being very ambitious but a man can dream haha, im pretty happy with where i am financially at the moment considering my age and all my assets and being on the property market at a youngish age. I just aim to be a entrepreneur and eventually get into property and dealing cars full time as its something i really enjoy doing, the financial side just isnt with me at the moment.

Thanks Jack

You'll struggle to get a BTL mortgage on any more than 80% LTV. Which means you'd have to leave 20% in your house - so about 25k. I make it that you have, potentially, 39k in the house - so you'd have a max of 14k deposit for the new place. You'd need a min of 10% obviously for your 160k place...so you're a couple of grand short, plus fees, plus stamp duty, plus moving costs...and you may require more than 20% for a BTL depending on circumstances and may require more than 10% on the new place...Oh...and then there's affordability....You won't find a lender willing to lend 140k on a wage of 20k...So unless you have a stack of savings somewhere, this is looking like a struggle...

Never know though, save hard (put that overtime money away) and hope property prices go the right way in the next 3-4 years it might be much more doable...

mt2man

Thanks for the reply, yeah i thought i pay be abit optimistic with my plan! Haha, i may get a lodger again to help boost my savings ready for my move.

But if by the time i do come to move and i have say £40k in the house and £15k in savings i would have around £52k for a deposit and some left over for fees and stamp duty etc.

If i move to a £160k 3 bed house i could get 2 lodgers which in my area could pay £80 a week each which with 2 lodgers is nearly an extra £8.5k income which would cover most of my mortgage and bills so i essentially have my whole salary a year to spend on food, petrol and savings which should leave me in a very good position financially so would only take a year or so to save for a buy to let?

Jack

Idiophreak

mt2man wrote: »

Thanks for the reply, yeah i thought i pay be abit optimistic with my plan! Haha, i may get a lodger again to help boost my savings ready for my move.

But if by the time i do come to move and i have say £40k in the house and £15k in savings i would have around £52k for a deposit and some left over for fees and stamp duty etc.

If i move to a £160k 3 bed house i could get 2 lodgers which in my area could pay £80 a week each which with 2 lodgers is nearly an extra £8.5k income which would cover most of my mortgage and bills so i essentially have my whole salary a year to spend on food, petrol and savings which should leave me in a very good position financially so would only take a year or so to save for a buy to let?

Jack

You're only allowed to earn £4250 from lodgers before you have to start paying tax on it. Worth remembering.

As before, though...consider that a lender's only likely to lend your 45 x your salary - so a max of 100k...So you'd need 60k deposit....and then it's possible that a £160k property now will be worth £180k by the time you buy....of course, your wage might increase too - which would help a lot.

Also remember that there are plenty of costs associated with being a landlord...it's not the "free money" a lot of people seem to think it is - so things may wind up tougher than you imagine...

VFR-Rider

Idiophreak wrote: »

snip...consider that a lender's only likely to lend your 45 x your salary - so a max of 100k...snip

45 x seems optimistic... :A

Thrugelmir

Sell the property when it's time to move.

To build your savings overpay the mortgage.