First Home and BTL Advice NEEDED!

yllah

Hi All,

In a very different position since I last posted a few months ago.

I have a plan in my head and i'm viewing a property tomorrow morning, listed for £68k but i'm hoping I can get them closer to £60k mark (North-east area lol)

The location is ok but will do some more research before making any sort of offer.

To cut a long story short, as we only currently have £6k saved for savings i'm looking to put down 10% as a FTB and go onto a fixed rate for initial 2 years. I''ve been doing some sums and hopefully we can save alongside overpaying the mortgage so that at the end of the 2 year period we have enough equity to be able to rent out the property but then put 10% down (roughly £11k) on another property that we would move into, that's the plan!

The bits i'm unsure of are that I would be borrowing £54k on this first property and I am aware I can only overpay by 10% every year, so at most I can only over pay £5,400 in the first year. Therefore i'd like to get the equity down to around 25%. Main question is that how does the equity work at the end of the 2nd year when we'd be looking to move? Would I need to get consent to let from current lender and then would they value it at that time? Or would I be able to change to a different lender at that point meaning I'd need to get a BTL mortgage?

I'm also aware about the Early Repayment Charges and want to avoid those.

Also I have questions around the feasability, do people think this is a good plan in general?

When I come to rent it out I know I am then taking on landlord responsibilities and extra fees. Looking at other 2 bed properties in the area advertised for renting they appear to be going for around £425 pcm and i'd work out the mortgage would be around £300 a month at most.

Is there anything else major that I really need to consider in regards to what I'm planning to do and what I'd need to consider at the end of the 2nd year????

Thank you

Pixie5740

Not every mortgage restricts you to overpayments of 10% of the outstanding balance every year, some mortgage allow unlimited overpayments.

yllah

Thanks pixie.

Do you have much experience with BTL mortgages? I'm hoping if I get the place at a reduced price now and improve it and should get plenty equity aswell as the overpayments.

When re-mortgaging do they come out to value the house themselves?

yllah

Not sure if anyone has any other suggestions but i've also been looking at offset mortgages, majority of those allow me to overpay up to 99.9%.

Not entirely sure how it works but I think I can overpay but also have savings which are accessible, which I will add too rather than withdraw

yllah

UPDATE: viewed house, mention they had viewings but nothing about offers when she showed my around.

3 hours later someone else from the office called to get my feedback, said I would like to view again on sat. They put me on hold then came back and said I could view it but offer has been made, and do I want to put an offer in ha! I said no, she continued to say viewing is booked for sat morning but may get cancelled if the offer is accepted before then.

Surely this is just the estate agent calling my bluff? Can't imagine a house being on the market since Jan to then suddenly within a few hours of me viewing it there has been another offer??!!

termhero

yllah wrote: »

UPDATE: viewed house, mention they had viewings but nothing about offers when she showed my around.

3 hours later someone else from the office called to get my feedback, said I would like to view again on sat. They put me on hold then came back and said I could view it but offer has been made, and do I want to put an offer in ha! I said no, she continued to say viewing is booked for sat morning but may get cancelled if the offer is accepted before then.

Surely this is just the estate agent calling my bluff? Can't imagine a house being on the market since Jan to then suddenly within a few hours of me viewing it there has been another offer??!!

It might well be a bluff, the key question though is, are you prepared to risk it not being one?

yllah

I personally think it is a bluff.

However, back to the question, yes i'm waiting to take the risk. Were in a strong position as we aren't in any rush as every month goes buy we have more deposit and aren't desperate to move out which could push us into making a panic offer

termhero

yllah wrote: »

However, back to the question, yes i'm waiting to take the risk. Were in a strong position as we aren't in any rush as every month goes buy we have more deposit and aren't desperate to move out which could push us into making a panic offer

Then you have nothing to lose, good luck!

yllah

ANOTHER UPDATE:

The offer wasn't a bluff. I got an email today stating the vendor had accepted the offer with no further marketing hahaha I have awful judgement skills

Would love to know what the offer was but the search continues.

Learning this house buying game slowly but surely