First-time buyer: getting a mortgage or buying outright

getmore4less

SM99 wrote: »

Damn, maybe I'll need a part-time job first. Yea, I've had a look at a property that wasn't HMO certified, I'd hope the certification process wouldn't be too long. By exit plan, do you mean dividing the rental income and/or capital gains fairly if I do decide to sell?

You need to have exit plans for brother as well

eg. if you can't buy him out whhe he wants his money back you HAVE to sell.

What happens if one of you dies.

the list goes on.....

One advantage of the no mortgage is you don't have the "can't pay, won't pay" issue.

Then you have who pays the repairs improvements, who pays the bills how to split the profit from the rent etc.

Pixie5740

SM99 wrote: »

I guess buying outright is the only way to go then. No, my brother may be working by September though. I would at least leave myself around £10k to cover any future costs. In any case, I was hoping to move into a house with very little, if any, improvements needed. Does income from lodgers over, say 10 years get added to taxable capital gains as well then?

Income from lodgers has nothing to do with capital gains. Income from lodgers may be subject to income tax depending on whether or not you can use the rent a room scheme.

The capital gains will come when you eventually sell the property. If you have more than one lodger, or if you let part or all of your
home at any time in your period of ownership, the let parts will not qualify for Private Residence Relief. However, you may be entitled to claim ‘Letting Relief.’

SM99

Thanks for the info people, that stuff on PRR and LR is pretty useful, had never heard of it before. I don't think CGT will affect me, unless house prices in my region increase substantially over the next 5-10 years.

We would plan to split costs and income depending on his investment eg. 25% from him would mean he pays 25% of council tax, and receives 25% of total rental income, including what I would pay if I was also contributing to the rent. He's also mentioned that he would like to invest in a property with me, to get a better return than current ISAs.

I'd estimate soliciting, surveying and moving fees together should cost around 2k?

MandM90

SM99 wrote: »

Thanks for the info people, that stuff on PRR and LR is pretty useful, had never heard of it before. I don't think CGT will affect me, unless house prices in my region increase substantially over the next 5-10 years.

We would plan to split costs and income depending on his investment eg. 25% from him would mean he pays 25% of council tax, and receives 25% of total rental income, including what I would pay if I was also contributing to the rent. He's also mentioned that he would like to invest in a property with me, to get a better return than current ISAs.

I'd estimate soliciting, surveying and moving fees together should cost around 2k?

Does that include any work that needs to be done? I'm getting a full survey which is about £800, the solicitor's fee is about £1.3k off the top of my head. Plus if you're getting a mortgage you'll have a mortgage arrangement and/or valuation fee. Mine was about £600-1000 I believe (can't for the life of me remember now!) including a Homebuyers Report. Plus if everything falls through you'll be paying fees for more than one house.

It might be worth getting quotes/pricing up now as I'm in a fairly expensive region and you might find you're not quite as badly stung.

Are you paying rent as you might not be able to move in straight away. We have a young daughter and have a 6 month contingency for paying both rent and mortgage (luckily properties are on the same street and one we are trying to buy is chain free) in case everything goes t*ts up or we decide to do serious work before moving. If you can get together a few grand extra at best you'll have plenty extra for repairs, insurances etc.

You may also want to talk to a solicitor about going into business with your brother, again any arrangements you make will be at a cost.

SM99

No, I meant without any work on the property. Would I need a full survey if everything is in working order already? Wow, the solicitor's fee is expensive. Some posters mentions that I may be unable to get a decent mortgage, being currently unemployed, so those fees will go out the window.

I live in an, ahem, less prosperous region of the UK(N. Ireland), so maybe such fees won't be so expensive, considering houses are dirt cheap compared to those most of you folk buy across the water.

Also, I live in my family home atm, so I'm comfortable waiting a few months if no place I view as good value is for sale. I'll definitely still set aside £10k for any misfortune I may have in the future.

Rambosmum

You'll need a job to get a mortgage, and have had that job for 3 months. The job can't be 0 hours contract and you'll need to show a steady income.

Where are you buying? 100k is unlikely to buy a 4 bed anywhere, definitely not in a student hotspot.

You'll need solicitors fees, survey, back up for if things go wrong (and they always go wrong when you move in to a house), furniture, gas safety certificate, landlords insurance, buildings insurance, moving costs etc. 100k won't go as far as you think.