first time buyer considering a buy to let rather than own property

ahomemadetouch

hoping to get some advice on if this is feasible or something i shouldn't be doing

Facts
we live in a high cost area for properties - portsmouth
We don't earn enough to buy a property on the open market particularly as lots of lenders won't count tax credits
We earn just over £19000 annually and then tax credit and child benefits of just over £7000 taking our income upto £26280.

we are currently renting and I don't like having no equity so I am considering. Buying a property as a buy to let investment in a cheaper area - say greater manchester.

I understand that
i need at least a 25% deposit
I would have to pay tax on rent over and above the interest payments on the mortgage
and the rent needing to be 125% of the mortgage payments.

what I am not sure about is.

a lot of the property i am looking at pay need a mortgage of around £30,000 which it doesn't seem many lenders do
would I be able to get a buy to let mortgage without already owning my own house.

hopefully thats enough information for someone to be able to advise me.

greatone

ahomemadetouch wrote: »

hoping to get some advice on if this is feasible or something i shouldn't be doing

Facts
we live in a high cost area for properties - portsmouth
We don't earn enough to buy a property on the open market particularly as lots of lenders won't count tax credits
We earn just over £19000 annually and then tax credit and child benefits of just over £7000 taking our income upto £26280.

we are currently renting and I don't like having no equity so I am considering. Buying a property as a buy to let investment in a cheaper area - say greater manchester.

I understand that
i need at least a 25% deposit
I would have to pay tax on rent over and above the interest payments on the mortgage
and the rent needing to be 125% of the mortgage payments.

what I am not sure about is.

a lot of the property i am looking at pay need a mortgage of around £30,000 which it doesn't seem many lenders do
would I be able to get a buy to let mortgage without already owning my own house.

hopefully thats enough information for someone to be able to advise me.

Hi there,

my opinion is that you shouldn't really do this (BTL) and focus on saving enough money to get a deposit to buy a place in the city you live.

The are a few reasons for this

1) Your earnings are not particularly high, this means that if you tenant decides not to pay for a couple of months you will really struggle to cover this yourself

2) Most BTL lenders wont touch you because you typically need to be earning over £25k (I doubt they look at tax credits)

3) How familiar are you with the Manchester rental market. You may struggle to rent out a place that's not in a prime location.

4) What would you do if property values crashed? And the rental market becomes soft and you struggle to rent it out. Would you be prepared to live in the property.

You can obviously choose to go ahead with this if you can find a lender who would do this but Id advise real caution.

kingstreet

You've got issues with income levels and not owning your own home.

Speak to an independent broker to establish if there are any options open to you.

koexelek

ahomemadetouch wrote: »

would I be able to get a buy to let mortgage without already owning my own house.

Without a proveable ( only earned income is taken into account usually, not tax credits or benefits) income of less than £25k, then almost certainly no

ahomemadetouch

Thank you everyone at the moment it seems like my options are this or shared ownership and we don't actually earn enough to qualify for shared ownership.

kellylucinda86

Some banks do take tax credits into consideration. I also get 7k in tax credits and nat west take in 50% of them for me to get a mortgage on a buy to let.

ahomemadetouch

unfortunately 50% doesn't take use over the 25k minimum earnings

Leon_W

Would the benefits not be reduced as you receive extra income ?


The BTL idea seems a bit pointless to me.

ahomemadetouch

Leon_W wrote: »

Would the benefits not be reduced as you receive extra income ?


The BTL idea seems a bit pointless to me.

no because the benefits are
tax credits based on how much we pay for nursery
and child benefit - I am not doing it to massively affect my income more to build some equity over the next 5 years.