Buy to let?

sundeep1984

I am hoping to buy house just to let..i am only 23!

i will be putting in £60k as downpayment adn looking to buy around £230k house...i know its big difference will be hard but i will try my luck here...

I was wondering some estate agents say we will pay you wether your house is vacant or in use. How truth is that? is their a catch in that?

Also is their any mortage calculators online? that i know how much mortage i have to pay if i do so and so down payment adn house value of £230k?

thanks in advance

pcwilkins

sundeep1984 wrote: »

i will be putting in £60k as downpayment adn looking to buy around £230k house...i know its big difference will be hard but i will try my luck here...

So you need a £170k mortgage. You probably need to earn at least £34k a year to get this.

I was wondering some estate agents say we will pay you wether your house is vacant or in use. How truth is that?

Yes. Effectively you let house out to agent and they sublet it to tenant.

is their a catch in that?

Yes. You will only receive around 60-70% of market rent and you will still be responsible for maintenance etc. I.e. I rent a house from an EA for around £600pcm. They rent it from the owner for £400pcm. Nice work if you can get it...

Also is their any mortage calculators online? that i know how much mortage i have to pay if i do so and so down payment adn house value of £230k?

See http://www.thesalarycalculator.co.uk/mortgages.php. For a £170k mortgage over 25 years at 7% interest you will pay £1,178.19 a month and the total amount repayable will be roughly £350k. The rental needs to cover the repayments and other costs if you are to make a profit. So essentially you need to be sure you can rent the house out for at least £1300 per month --- possible more. Have you done any research on local rental values for the size/type of property you are thinking of buying???

Whatever you do you don't want to end up topping up the rent with your own cash just to pay off the mortgage. And if interest rates go up further, you will have to raise your rent, and there will come a point where you will not find tenants.

Personally I would invest your £60k elsewhere. Borrowing £170k to invest in property right now doesn't strike me as a great idea with interest rates going up and HPI slowing down. If property prices fall (or even just stop rising) you could be in for a disappointing amount of profit, or even a loss. But at the end of the day the risk is yours. Just don't think BTL is a simple way of making money. I may be misinterpreting you, but from the tone of your post it sounds like you need to do a lot more research and a lot more thinking before taking the plunge.

Peter

Doozergirl

sundeep1984 wrote: »

i will try my luck here...

You're going to need it.

Have you done any homework at all on yields if you don't even know how much mortgage repayments are?

You have absolutely no idea what you are getting yourself into.

sundeep1984

thanks peter for your advice.

yes your right im very newbie in this. I juzt thought invest some moiney somewhere..knwing my age only 23 im more prone to waste money in stuffs i shouldnt be hence want to invest somewhere...just for my future..

What other investments can i do with 60k then?

sundeep1984

Doozergirl wrote: »

You're going to need it.

Have you done any homework at all on yields if you don't even know how much mortgage repayments are?

You have absolutely no idea what you are getting yourself into.

Nah i am just trying to do some research here...the 60k will be given to me by my dad he just wants me to make sure i keep paying the monthly repayments IF their is no tenant...i am learning will take time to get to know everything lol

pcwilkins

sundeep1984 wrote: »

thanks peter for your advice.

yes your right im very newbie in this. I juzt thought invest some moiney somewhere..knwing my age only 23 im more prone to waste money in stuffs i shouldnt be hence want to invest somewhere...just for my future..

What other investments can i do with 60k then?

There is no way you are going to invest £60k based on what you read on an open internet forum, I hope.

Peter

lynzpower

sundeep1984 wrote: »

thanks peter for your advice.

yes your right im very newbie in this. I juzt thought invest some moiney somewhere..knwing my age only 23 im more prone to waste money in stuffs i shouldnt be hence want to invest somewhere...just for my future..

What other investments can i do with 60k then?

why dont you see an independent financial advisor.

Most rental yeilds are less than 5% these days. this basically means the retuirn on the money in the property will give you 5%. However, theres bank accounts that give you double that, pretax. So therefore buy to let looks like a crap "investment" option compared to bank accounts.

residentail property is a very risky investment. I would speak to an IFA and take some dvice in the meanwhile familiarise yourself with the savings & investments boards.

pcwilkins

sundeep1984 wrote: »

Nah i am just trying to do some research here...the 60k will be given to me by my dad he just wants me to make sure i keep paying the monthly repayments IF their is no tenant...i am learning will take time to get to know everything lol

Forgive me, but you have a very stupid dad.

Peter

Fulham_Mark

If you aren't going to live in this place then you are protecting yourself against house prices rises only which you may feel is worth the risk.

However if your house price drops say £10k then even though this is only 4% of the £230k house price it's actually 17% drop in your 60k investment.

Using the 60k to buy a place for yourself is different as it's impossible to put a value on having a place for yourself etc. You could probably get away with living in your buy to let property with 1+ tenants so long as you don't tell the lender. I know BTL mortgages allow you to borrow much more than 3x your salary.

As a comparison to buying a house my Allianz BRIC ISA has increased by 23% since April this year - which is 92% per year if it continues.

If you want to get into investment play with a small amount of money first, get used to how it feels to win and lose then progress to investing your dad's 60k

good luck

pcwilkins

Fulham_Mark wrote: »

You could probably get away with living in your buy to let property with 1+ tenants so long as you don't tell the lender.

If you're living in it, why not just get a residential mortgage? And the tenants would then presumably be lodgers which is an entirely different kettle of fish.

Peter

Fulham_Mark

I think BTL mortgages are based on deposit (20% preferred) plus rental income rather than salary

so with 60k the chap could get a house worth £360k. He would need to earn £102,000 a year to get the same on a residential mortgage. Which at age 23 I doubt he does.

Many people on this site believe that this has fuelled house prices. Although i think a lot of this is parents buying a BTL for their children at college for example rather than the rich but dim people we see on tv who decide they fancy being property developers.