Buy to let and help to buy isa

Edgey96

Official MSE Insert:

You may also find our fully researched Help to buy ISA guide helpful.

Back to the original post...


Hi,

Im 19 years of age with £10000 saved for a propety and I would like to go into property development within the next couple of years. I have come across a few hudles; must be a homeowner to have a buy to let mortgage and need 40% deposit to get a good choice of mortgages - is there a way round this?? Also if I was to save in a help to buy isa, could that go towards a buy to let mortgage?

Thanks

silvercar

No. Help to buy is to help you buy your own home to live in, not as funding for a business.

Thrugelmir

Why not maximise the benefit of a Help to Buy ISA and use it to buy a home. Far less risk than owning a BTL and a guaranteed return that's hard to beat.

TheNewGuy_2

If OP bought a house outright with the help to buy isa, lived there for awhile could he then let it out?

matttye

TheNewGuy wrote: »

If OP bought a house outright with the help to buy isa, lived there for awhile could he then let it out?

Yes if the mortgage company allowed it.

dinkylink

matttye wrote: »

Yes if the mortgage company allowed it.

But if he wanted to buy a second home to live in, in the future he would likely have to pay the 3% sdlt surcharge on that property. At least that's what it currently looks like although nothing is set in stone yet.

Caz3121

you mention property development and buy to let. Are you looking to buy a property to do up and sell on or are you looking to buy a property to rent out.
Whichever it is, it is worth doing a lot of research. If the former, do you have the skills/trades to do the work yourself. Having to pay to get the work done eats away profit. If the latter, are you aware of the requirements of being a landlord

Edgey96

I would like to do property development in the long term but for now I want try out the market without over complicating things. Therefore a buy to rent out would be ideal at first

HappyMJ

Edgey96 wrote: »

I would like to do property development in the long term but for now I want try out the market without over complicating things. Therefore a buy to rent out would be ideal at first

Why though?

I know people talk about lots of money in property but as a landlord myself there really isn't much in it. The rent you get is no less than 125% of the interest payment on the mortgage. Any money left over after paying the interest goes towards maintenance costs on the property. I'm hardly left with anything after all of the costs are paid.

If I had a spare £20,000 I could buy a terraced house around here for £80,000 with a £60,000 mortgage. It could rent out for £400 per month. A 6% return is quite good. The interest on the mortgage would be £225. I could have earned £75 per month on the £20,000 of cash that I had just by putting the money in the bank so I'd send £60 to my bank account and put £15 aside for tax to account for the lost interest. The remaining £100 per month is just enough to pay a letting agent to find a tenant, pay for gas safety certificates and to put enough aside for regular painting and decorating. Therefore I don't get any more money than simply by putting it in a high interest current account and regular savers.

_CC_

Edgey96 wrote: »

I have come across a few hudles; must be a homeowner to have a buy to let mortgage and need 40% deposit to get a good choice of mortgages

A few more hurdles for you:

• The rental income will likely have to cover 125% of the mortgage
• You'd likely need to have a decent enough income yourself to get the mortgage
• From next April you'll have to pay 3% additional stamp duty for BTLs and additional houses
• Property prices in a lot of the country (not just SE) are at historic highs compared to local incomes