BTL to myself – crazy idea? Or there are better solutions?

knonist

You are right, any suggestion of what sort of options I have?
I have about £30K cash from saving, and she have around £18K, might be able to borrow 40K from family.

Angry_Bear

knonist wrote: »

You are right, any suggestion of what sort of options I have?
I have about £30K cash from saving, and she have around £18K, might be able to borrow 40K from family.

Look at a 30 or 35 year residential mortgage.
For £220k (assuming you borrow the money from family and keep some back for costs) you'd be looking at a monthly cost of about £910 - assuming an interest rate of 3.5%.

I don't know it that's feasible or not, but it's certainly safer than your BTL idea (given the current cost of your rent, would the type of house you want to buy really support a rental income sufficient to cover a repayment mortgage?)

ViolaLass

knonist wrote: »

The reason I would like to BTL to myself is because I would like to get someone to pay for my mortgage for a few years before I finally need the property. At the moment, my rent is cheap enough so I dont need to buy, but as mentioned, AstraZeneca is moving to cambridge so I would like to buy before it become too expensive.

But the question was "Why can you put £90k down on a BTL but not if your are buying for yourself?"

knonist

Angry_Bear wrote: »

Look at a 30 or 35 year residential mortgage.
For £220k (assuming you borrow the money from family and keep some back for costs) you'd be looking at a monthly cost of about £910 - assuming an interest rate of 3.5%.

I don't know it that's feasible or not, but it's certainly safer than your BTL idea (given the current cost of your rent, would the type of house you want to buy really support a rental income sufficient to cover a repayment mortgage?)

Thank you for the advice.
I guess I'm the lucky few who is enjoying a nice house with low rent in cambridge at the moment.
Both me and my partner is living in a 6 bedrooms shared house with 5 people, and the landlord is abord and don't increase the rent - hence the low rent. The normal rent for a 2 bed semi here is around £900-1000.

I guess renting out the whole house is not of my best interest and I guess I might be better off taking in a lodger.

Any suggestion on how to get a decent mortgage?

knonist

ViolaLass wrote: »

But the question was "Why can you put £90k down on a BTL but not if your are buying for yourself?"

In simple terms, I got lucky with my rent, which is about 1/3 of mortgage payment. So it made sence to buy now and BTL until I need to place.

ACG

I think you missed the point to my question.

If you buy a residential your words were "we only have 10%deposit".
So on a £300k property that £30k.

Yet you then say you could put down £90k if its a BTL property.

So im wondering where the extra £60k is coming from for a BTL that cant be used on a residential - or am I missing something?

Theoretically this can be done but you are going to need a broker as trying to get a BTL as a first time buyer isnt easy. Also as AMN says, forget the whole ltd co idea. It creates more work, reduces the lenders available and will do very little for you.

Also bare in mind if you rent the property out you could be liable for CGT when it comes to selling. Im not going to begin to try and explain on a forum how that is calculated but have a read up on the HMRC website. Its unlikely to be a lot assuming you only rent it out for a couple of years but its worth taking into account.

knonist

ACG wrote: »

I think you missed the point to my question.

If you buy a residential your words were "we only have 10%deposit".
So on a £300k property that £30k.

Yet you then say you could put down £90k if its a BTL property.

So im wondering where the extra £60k is coming from for a BTL that cant be used on a residential - or am I missing something?

Theoretically this can be done but you are going to need a broker as trying to get a BTL as a first time buyer isnt easy. Also as AMN says, forget the whole ltd co idea. It creates more work, reduces the lenders available and will do very little for you.

Also bare in mind if you rent the property out you could be liable for CGT when it comes to selling. Im not going to begin to try and explain on a forum how that is calculated but have a read up on the HMRC website. Its unlikely to be a lot assuming you only rent it out for a couple of years but its worth taking into account.

I think I have missed the question.

Between me and my girlfriend, we have £48K cash available.
I then subtracted 9K for stamp duty and reserved 10K for fees / other expenses (i.e. surviving and simple refurbishments). I will have around 30K for the actual deposit, which is roughly 10%.

If I borrow £40K from family (as an investment), then I will have a total of £88K
I forgot to subtract the stamp duty and reserve £10K for fees. With borrowing, I will have £70k to use for the deposit – which is significantly less than £90K…..

That 3% stamp duty is really annoying…..

ACG

Gotcha!

Find a decent enough broker, criteria wise there will be lenders for it. The biggest issue I can see you having is trying to convince an underwriter you are not going to move into it whilst there is a BTL mortgage on it.

nidO

ACG wrote: »

Find a decent enough broker, criteria wise there will be lenders for it.

Am I missing a trick here as to why BTL lenders would allow the OP to use a sizeable loan to fund his deposit? I was under the impression this alone would make the BTL idea a complete non-starter, as without that loan the OP has around or slightly less than a 10% deposit, not enough for a BTL.

knonist

ACG wrote: »

Gotcha!

Find a decent enough broker, criteria wise there will be lenders for it. The biggest issue I can see you having is trying to convince an underwriter you are not going to move into it whilst there is a BTL mortgage on it.

As an advisor, do you think a 30K deposit is sufficient for buying a 300K house? (If I don’t borrow 40K from family?)

Will I be better off using the help to buy scheme from the government?