First time buyer / buy to let

speedqueen

Hello

I'm one of those whose salary doesn't qualify for
current property prices. I don't want to move to an
unknown / un-safe / in-convenient neighbourhood, so
my thought was to get a buy to let, as I then would
have someone else contributing to my mortgage
repayments.
I thought that despite the fact that it seemed my only
option, it was also a safer one, as if I lived in
the flat I'd only have myself to pay the mortgage, and
I'd be stretched to do it. Whereas with a buy to let I
have rental income AND my savings / leftover salary
every month if need be, ensuring a more secure
financial position.

However a buy to let means not only do I need a
bigger deposit (further delaying the purchasing
possibility, and as prices keep rising it takes a long
time to chatch up) but I would also be penalised by
having a higher rate. Now considering these criteri
are
levied on the basis of buy to lets being commercial
deals, surely they can be dropped for residential buy
to lets. Who makes up the mortgage requirements? Why
should we pay more initially and throughout the life
of the mortgage just because we're not living in it,
is there something that I'm missing?

I think someone should devise a buy to let for first
timers buying property, where the criteria is a mix
of the normal deposit and rate, but you can let it out
in order to help with the repayments. Or does that
just
mean that everyone would buy and there'd be no one
to let?!

Does anyone know of any mortgage providers that may
be able to assist please?

Thanks

homersimpson_3

The mortgage company require a higher rate for mortgage because there is an increased risk with buy to let. there is no garauntee you will find a tenant or have enough tenants to cover the whole 25 year mortgage. most houses need extra work done on them prior to letting (e.g. structural/internal improvements, decoration, furniture if letting as furnished house etc) and the costs mount up.
have you considered share ownership with option to purchase more of house when financial circumstances allow. if you want to go down buy to let route suggest you contact mortgage broker who will do necessary searches for you.

Debt_Free_Chick

Your plan is OK provided your property is always let. Typically, this is not the case as there is often a gap between one tenant moving out and another moving in. Have you also factored in the rent you will pay, by living elsewhere, into your budget?

Why not buy somewhere, live there and get a lodger?

BTL is a tricky proposition for an experienced property owner/landlord - it's a complete minefield for a FTB. I really suggest you do some "worst case scenario" numbers to be sure you can really afford to do this.

herbiesjp

What kind of figures are you looking at to purchase and what mortgage amount are you looking at? What rental income will the property provide?

speedqueen

morning
thanks for your answers. I didn't realise that the higher rate was to cover the empty months,repairs etc. I thought the reason for rental income to be minimum 125% of mortgage costs covered that.

I've looked at some shared ownership ads and they always still seem pretty expensive to me - yes you get an affordable mortgage for your portion, but the rent you pay on the balance of the property hikes the monthly expense right up again. Plus the houseshare that I'm in now is pretty cool, (big house, garden, cheap rent to suit the falling walls!) so I only want to leave it to live on my own, if I can help it.

I was looking at a property that would possibly go for £146k, I was hoping for a max mortgage but as it needst to be 15%, I have £k5, deposit, would do loan for the balance (seeing as BTL don't take personal debt into account) they'd had a rental of £700 (although I don't think that couldn't be increased) and yes worse case scenario of their rental doesn't cover mortgage which is why I declined, however I have an extra £400 a month that I could put towards it. I know it's not what the experienced &/or knowledgable ones say you should do,(need to put extra in to make the repayments) but if i'm paying off my own mortgage, surely it's not a bad thing??

Thanks again for input

meanmachine_2

Let me get this straight - you live in a place you like at the moment.

You can't afford to buy.

You want to get on the property ladder, but don't want to live in the property.

You want the hassle of keeping tenants happy and/or paying an agency to cream of 10%.

You have found out that £700pcm is the going rate in your area, but think you could get more. You realise rentals have been flat for the last 10 years, don't you?

You want to take out a loan to bump up your deposit.

Er, anything else I've missed out?

Oh, by the way, I've got some tech stocks that you might be interested in buying. You cannot lose.... Trust me....

Basically, my message is this: If you can't afford it, you can't buy it. Stay where you are. Save what you can. ENjoy living in a property of a higher spec than you could ever afford yourself, concentrate on getting that promotion and when the sums stack up, then you should buy.

Any other plan of action is crazy, imo.

slater14

speedqueen,

After reading your posts very carefully (and re-reading them several times).

Your basis for investment in property is FEAR and possibly a bit of greed! - no offence intended - that prices will keep rising.

Meanmachine has spelt out your situation very clearly - please do read his post carefully.

Fear or greed are very very bad reasons to buy into any market. I would go as far as to say you stand a 95% chance of losing the propertry inside 2 years without a market "correction" or higher IR - shorter if either change and it would take you probably 7 - 10 years to financially recover from this venture.

speedqueen

Fear I'll give you, greed is way off the mark and I can't see where that one came from!
I'm 32, single, don't have anything to show for my years, & the love life ain't showing signs of improving. (Added to the fact that I don't want kids, tell me when I'm ever going to get a husband) I want to get something in my life that I can be proud of (owning something from the adult world?) and what am i waiting for, how much longer will it take before even 2 people together can't buy a place, if prices keep climbing as stupidly as they have been.

I'd also love to have my own place and leave house sharing behind. Problem is to live on your own costs a lot & I don't want to put that towards someone else's mortgage. As much as house sharing can be a pain in the butt I'm currently on a good deal, so don't want to lose it unless I'm paying my own mortgage & living on my own, and by that I mean that there's no point moving into another houseshare and gaining nothing from the move.
Putting someone else in to pay the mortgage was purely from an affordability point of view, thinking that then with my extra cash i'd have less chance of losing it all. Id rather live in it myself, but then I'd have no fall back.
And of course I'm scared the property marketing will keep going up and it'll be even more impossible to get onto it, what non-property owner isn't? It's bad enough as it is, hence my hurry! I'm not looking for a number of places or a huge house, I'm looking for one, one bedroomed place, sufficient for one person. How can that be greedy?

meanmachine_2

If you want something to own, why don't you get a dog? Or won't the landlord allow it?

You seem to want a house for the sake of it. Because "other people" have them.

I'm 32 and loads of people I know still rent. And they're not miserable. In fact, their lives are simple. They don't have to worry about maintaining their property, aren't wedded to a mortgage, can change jobs, take "time out" when they want and don't feel like second class citizens.

You seem to think having a property will make you feel more grown up. Ask the majority of people on the continent whether renting makes them fell inferior.

Jeez, this obession with owning property is just bizarre. Only in the UK do you see it. Maybe you should visit other countries and realise that owning a bunch of bricks isn't the be all and end all.

Oh, and maybe, if you do get a bloke, you can think about setting up home with him? Use that as an incentive to get out there and find someone.

I'm not attacking you. But you seem to be panicking. Relax. There's no need to panic.

surfcat

speedqueen wrote:

I don't want to put that towards someone else's mortgage.

So you want someone else to be paying off your mortgage?

I suggest you check out some of the threads on https://www.housepricecrash.co.uk and then see if you still want to BTL.

Also an important point is that if ever you want to sell your BTL you will pay capital gains tax on any profits. Of course, there won't be any profits as the market is going in to freefall.

speedqueen

surfcat wrote:

So you want someone else to be paying off your mortgage?

Well if I can't afford to live in it myself, and that's the only way to get onto the ladder so that down the line I can eventually be able to live on my own, why not. I'd expected that I'd move into it at some stage when I could afford it better, so presumably tax wouldn't have been as issue, I think.

Thanks for the site. I keep hoping that the drop is going to happen, but then would the powers that be do everything that they can to stop a crash. Just because it's happened a number of times before, does that mean it has to happen again. It's a risk no matter what you do.