Buying a cheap house while renting

bigmaz

Thank you for your replies, much appreciated. I will def do a lot of research. But thought i'd see if anyone else has done a similar thing. I live in Scotland. I do not have money for a deposit, and def not £17k, lol. Plus I wouldnt be able to afford the repayments if I did. Well maybe I could JUST afford it now, but def not once the interest rates shoot up.

But again, thanks for your advice so far.

Cautious_Optimist

bigmaz wrote: »

to buy something it will mean downgrading

Do you mean DOWNSIZING?
Or is it location for work that is increasing your house cost requirement?

You say these cheap flats are "local"...?

Cautious_Optimist

bigmaz wrote: »

Thank you for your replies, much appreciated. I will def do a lot of research. But thought i'd see if anyone else has done a similar thing. I live in Scotland. I do not have money for a deposit, and def not £17k, lol. Plus I wouldnt be able to afford the repayments if I did. Well maybe I could JUST afford it now, but def not once the interest rates shoot up.

But again, thanks for your advice so far.

I think in Scotland, you also need to be licensed to be a LL.

bigmaz

Cautious_Optimist wrote: »

Do you mean DOWNSIZING?
Or is it location for work that is increasing your house cost requirement?

You say these cheap flats are "local"...?

Downsizing and living in a "not so nice" area.

We rent in a nice estate where the house prices are higher. Even though its just along the road from these flats.

Owain_Moneysaver

bigmaz wrote: »

As my original post, to buy something it will mean downgrading big time, which is not something I am going to do. So I thought, this way, after 10 years I will own a flat/asset worth £30k (hopefully more). That will hopefully be mostly paid for through renting. I dont see a negative there?

But in 10 years everything else will be a lot more expensive, so £30k probably will be worth even less as a percentage of a nice house - and in the meantime you will also have spent 10 years' rent on living where you are.

Also getting a BTL mortgage on a flat worth only £30k at the moment is going to be impossible, especially as you don't already own a house for security and don't have any deposit. Lenders require larger deposits (as a % of value) on BTLs because bad tenants can trash the place knocking £10ks off the value or refuse to pay the rent and it's harder to repossess the house and resell it to recover the mortgage debt.

If you want to buy a house then you should first look at buying somewhere for you to live, and compromise on size, area, or both. Move into a campervan for a couple of years if you have to save for a deposit.

bigmaz

Owain_Moneysaver wrote: »

But in 10 years everything else will be a lot more expensive, so £30k probably will be worth even less as a percentage of a nice house - and in the meantime you will also have spent 10 years' rent on living where you are.

Also getting a BTL mortgage on a flat worth only £30k at the moment is going to be impossible, especially as you don't already own a house for security and don't have any deposit. Lenders require larger deposits (as a % of value) on BTLs because bad tenants can trash the place knocking £10ks off the value or refuse to pay the rent and it's harder to repossess the house and resell it to recover the mortgage debt.

If you want to buy a house then you should first look at buying somewhere for you to live, and compromise on size, area, or both. Move into a campervan for a couple of years if you have to save for a deposit.

Thanks for your advice. At the start you say everything will be more expensive, so surely that means that the flat will be worth a lot more too.

I am not going to downgrade. Its a personal decision we have made, it might not suit you or others, but it suits us. I will def be investigating further this option. I will let you know how I get on. Was hoping I could get comments from people that have done this.

Caz3121

There will be lack of lenders for this as commonly
BTL mortgages available to people that currently own property (outright or mortgaged)
25% deposit
min income £25k
rent = 125% of mortgage interest
There may be a lender out there but it looks like this could be a nonstarter

RAS

Are these flats ex-council? As you can be bit by very high repair bills.
Are they joint ownership?

There must be a reason nhey are so cheap ( and not justy a scruzzy neighbourhood)

bigmaz

They are ex council I think. There are similar flats up for rent in the same street. Thanks again for your replies. Min income is not a problem at all. I will speak to people who know about this stuff and let you guys know if it is a non starter or not

Annisele

If you don't have any deposit, then your plan is just plain flat out impossible - sorry. Most BTL lenders require a deposit of around 25%. It can sometimes be slightly less than that, but it's never zero.

I'd also suggest that a flat worth only £30k has something wrong with it, and whatever is wrong might make it unmortgageable.

In addition, house prices don't all move in the same way, or in the same direction. It's quite possible for three bedroom semis to go up in value by 10%, and have one bedroom flats fall in value by 5% over the same period.