Buy to let question - is this possible

Madcatgirl

I have a few questions about getting a buy to let mortgage. My personal circumstances are that I earn £23K with no debts apart from my student loan of c 9K. I also have 9K in cash. I live with my bf who owns his own flat and I pay him rent. My parents own a house nearby which is owned outright and rents out for £850 pcm. The house is valued at £220k. I've been in discussions with them about the possibility of buying half of the house from them and continuing to rent it. My question is - is this possible? I know I would have to get a btl mortgage for around £100K and that my half of the rent would not cover all of the mortgage payments, but I generally live frugally and could cover the rest of the money myself, even if it were unlet for a period of time. I see this as a long term investment as I would like to live in the house if we ever had children in the future. Would I be able to get a btl mortgage for more than the monthly rent? Any thoughts appreciated thanks!

Madcatgirl

******** Bump *******

dunstonh

My parents own a house nearby which is owned outright and rents out for £850 pcm. The house is valued at £220k.

Thats a very low yield. 4.6% before charges (such as management agency, dead periods, refurbishment etc) and tax.

My question is - is this possible?

Yes.

I know I would have to get a btl mortgage for around £100K and that my half of the rent would not cover all of the mortgage payments, but I generally live frugally and could cover the rest of the money myself, even if it were unlet for a period of time.

Why lose money on such a poor property?

I see this as a long term investment as I would like to live in the house if we ever had children in the future.

That could be a valid reason but is there some emotional tie to this house as it doesnt make business sense to do it.

could I be able to get a btl mortgage for more than the monthly rent?

Only with a big deposit.

To be honest, the property isnt attactive for buy to let and you will lose money on the mortgage side. You will be relying totally on property value growth and there isnt much of that at the moment apart from certain hotspots and knowledge that experienced landlords have. You will be almost certainly harming your own potential to buy for yourself in future and you dont really have the deposit at this stage to do it. A minimum of 15% deposit is required and thats with the rent covering the mortgage.

I think you will be having a lucky escape not being able to do this one. Far too risky for such a small gain potential.