Best way to make money from property

Tryingtomoveout

Hi I am looking for a bit of advice.


I would like to make some income from buying a second property and renting it out but I am not really sure if I could, and how much profit I could expect to make.

My situation:
I own a property £170K, I have an informal, interest free mortgage (140k) which I am paying back at a rate of £750 per month.

After all expenses, I have around £1000 spare each month. At the moment I don't have any savings due to recently using all my money towards this property, but after around 12 months I should have saved atleast 12K.

After I have built up some savings again, could I do the 5% deposit government scheme to get a new property? I realise I couldn't rent out the property but could I make the new property my primary residence and then rent out the flat I already own?

Has anyone done this? I really like the idea of buy to let but I wonder whether there would be much profit left after the higher rate on a BTLMortgage, and other costs.

Does anyone have any advice or experience?

Thanks in advance.

kingstreet

Tryingtomoveout wrote: »

After I have built up some savings again, could I do the 5% deposit government scheme to get a new property? I realise I couldn't rent out the property but could I make the new property my primary residence and then rent out the flat I already own?

No. You can own only one property from completion of your HTB mortgage.

Hoploz

I don't know what prices are like in your area but I think you'll probably need more than 12k to buy a BTL. Usually you need a 25% deposit for a btl mortgage.

Pixie5740

What is an informal interest only mortgage?

As already explained you cannot own more than one property and use a HTB scheme so you can forget that route.

You currently have £30k equity in your current home and zero savings. After 12 months you'll have £12k in savings some of which would need to go towards solicitors fees, surveys, etc so say you're left with £11k. As a 25% deposit that would equate to a £44k property. There are some properties that cheap in the UK, do you know any of the areas they are in?

mchale

Use the £1000 pm excess to make maximum overpayments on you current mort.

jjlandlord

Pixie5740 wrote: »

What is an informal interest only mortgage?

Very good question, indeed!

LeoTLion

OP states interest free, not interest only. Property purchased in cash by a family member and repaying money to them direct perhaps?

Tryingtomoveout

Hi

Thanks for the replies, Yes LeoTLion, that's what it is

I didn't mean necessarily trying to do this after only one year, I just meant that if I am able to save 12k a year it is something I could look at doing in the not too distant future.
Also, I quoted the 12k figure as I was not too sure of the 5% deposit scheme would work for me, as in that case 12k would have probably been fine - but as I see now, that is not an option.

I shall keep doing my research...