Buying a flat at 24 to rent out

egoode

It's always great to have goals for your savings and I think your plan to save £20k is great. At the moment it's probably best to think about the savings as just being a deposit for a property and not make a decision now whether it be your home or an investment. The specific question you are asking at the moment is difficult to answer as no one knows what the market will be like in 4 years time. All you can do at the moment is start saving and start getting a good credit history.

Good luck with your savings.

bigdavecox90

I'm pretty sure most mortgage lenders won't offer you a 'buy to let' mortgage unless you already have your own mortgage.

TeamPlum

Let me clarify:

You're 20 yes? At uni? So I'm assuming (correct me if I'm wrong), you'll be 21 at graduation?

How are you going to have 20k in 3 years?

kteara

CraggyRockFace wrote: »

You seem to be approaching this all wrong. You want to move out of your parents place before you're 26, but are planning to buy a BTL at 24? Why not just buy your own home at 24 and save yourself the hassle?

thanks for your reply,

my thought process was if I invested in a cheap (100k approx) flat to rent out I could use that income for life which would help me purchase my own home easier.

I don't believe I am capable of getting a mortgage for my own home, compared to a flat, at the age of 24. Average house price I am aiming for is around 300k. I would obviously love to buy my own home at 24 but I don't want to be up to my eyeballs with mortgage debt.

alberty

I've been thinking about this as well, -I have a deposit but a lousy salary, so with my deposit my parents could get a BTL mortgage which would buy a lot more house than I could with a residential mortgage, and once bought I could transfer that mortgage to a residential one. Yes it would mean living on a knife edge after mortgage payments, even sharing with lodger, but if I get in trouble I can rent it and move back with parents, and it gives me more breathing space if my career improves it wont be eclipsed by further property rises.
I just didn't trust the rise of the london property market before, I don't know if what is happening now post-credit crunch is an upward correction or a bubble? People with a lot more money and experience than me are happy to keep buying at these prices..

Pixie5740

kteara wrote: »

thanks for your reply,

my thought process was if I invested in a cheap (100k approx) flat to rent out I could use that income for life which would help me purchase my own home easier.

I don't believe I am capable of getting a mortgage for my own home, compared to a flat, at the age of 24. Average house price I am aiming for is around 300k. I would obviously love to buy my own home at 24 but I don't want to be up to my eyeballs with mortgage debt.

How much money do you think you are going to make from letting property?

A lot of people buy a 1/2 bedroom flat as a starter home and then go on to buy something bigger if and when they need to, and can afford to do so.

mik82

alberty wrote: »

I've been thinking about this as well, -I have a deposit but a lousy salary, so with my deposit my parents could get a BTL mortgage which would buy a lot more house than I could with a residential mortgage, and once bought I could transfer that mortgage to a residential one. Yes it would mean living on a knife edge after mortgage payments, even sharing with lodger, but if I get in trouble I can rent it and move back with parents, and it gives me more breathing space if my career improves it wont be eclipsed by further property rises.
I just didn't trust the rise of the london property market before, I don't know if what is happening now post-credit crunch is an upward correction or a bubble? People with a lot more money and experience than me are happy to keep buying at these prices..

You still wouldn't be able to get the residential mortgage as it would be assessed on your income. You can guarantee that if it worked out as "living on a knife edge" then you wouldn't pass the stress test part of the mortgage application (rates of 7%).

mik82

kteara wrote: »

thanks for your reply,

my thought process was if I invested in a cheap (100k approx) flat to rent out I could use that income for life which would help me purchase my own home easier.

I don't believe I am capable of getting a mortgage for my own home, compared to a flat, at the age of 24. Average house price I am aiming for is around 300k. I would obviously love to buy my own home at 24 but I don't want to be up to my eyeballs with mortgage debt.

What kind of job do you think you'll have in a few years? You're going to need to be earning >£60k to buy something like that by yourself. You might need to lower your expectations for a first purchase and save more. Getting someone else to pay for a small flat probably isn't going to work as easily as it looks.

Pixie5740

alberty wrote: »

I've been thinking about this as well, -I have a deposit but a lousy salary, so with my deposit my parents could get a BTL mortgage which would buy a lot more house than I could with a residential mortgage, and once bought I could transfer that mortgage to a residential one. Yes it would mean living on a knife edge after mortgage payments, even sharing with lodger, but if I get in trouble I can rent it and move back with parents, and it gives me more breathing space if my career improves it wont be eclipsed by further property rises.
I just didn't trust the rise of the london property market before, I don't know if what is happening now post-credit crunch is an upward correction or a bubble? People with a lot more money and experience than me are happy to keep buying at these prices..

If you can't get a residential mortgage for the kind of property you want now how do you envisage getting one in order to transfer your parents' BTL mortgage to a residential mortgage? This whole arrangement you are proposing seems pointless and messy.

If you want to buy a property then it sounds like you're going to have to find a way of boosting your income (significantly) or find a less expensive area to live in.

Strapped

When I worked in London, I had several colleagues from cultural backgrounds where it was usual to live with parents until one married. They all bought flats and rented them out, so that they would "be on the property ladder" when they did eventually marry. Seemed to work OK for them.