Buy to Let vision as FTB!?

seabass90

Person_one wrote: »

It doesn't sound very sensible to me I'm afraid. Being a landlord brings a lot of responsibilities and expense with it, its not an easy way to bring money in ever month, its a business, a job, with a huge impact on your tenants' lives. Even if any lenders did want to give you a BTL mortgage (unlikely, I'd have thought) do you really want that on top of your existing job?

If a two bed in a nice area is 140K and you have a good credit history, why not put down a 25% deposit to get a really good rate with monthly payments of less than £400 on a 35 year term (no reason not to have a longer term if you're only in your twenties!) and still have some cash in the bank for maintenance.

Edit: Have you put your figures into here to see what sort of rates/payments you'd be looking at?

https://www.moneysavingexpert.com/mortgages/best-buys/

Thanks, you're definitely right about getting a residential mortgage with a 35 year term. However I'm imagining I'm going to find it difficult to manage by myself on my salary with a £400 mortgage? I'm estimating council tax (with single person discount) to come to £100. Electricity, tv licence, Internet/phone, water and house insurance etc I've estimated to come to around £250? Then I've got my car (£100), car insurance (£25), phone (£10) petrol (£150) and private treatment (£100). I make that £1135, leaving me with 265 per month for food, savings, socialising and any clothes/toiletries! It's just not enough.

Getting a lodger would definitely fix this situation but I'm pretty sure a bank would not take this into account when deciding whether to give me a mortgage or not.

seabass90

ThePants999 wrote: »

I don't have advice, but I just wanted to pop my head round the door and say "good job" on saving £52K on a £1400pcm net income!

Thank you! However I can't take all the credit, some of that money in my savings account did come from inheritance. However I did a LOT of over time at work over the last 2 years and practically lost my social life so have saved a significant portion myself!

Guest101

seabass90 wrote: »

Thanks, you're definitely right about getting a residential mortgage with a 35 year term. However I'm imagining I'm going to find it difficult to manage by myself on my salary with a £400 mortgage? I'm estimating council tax (with single person discount) to come to £100. Electricity, tv licence, Internet/phone, water and house insurance etc I've estimated to come to around £350? Then I've got my car (£100), car insurance (£25), phone (£10) petrol (£150) and private treatment (£100). I make that £1235, leaving me with 165 per month for food, savings, socialising and any clothes/toiletries! It's just not enough.

Getting a lodger would definitely fix this situation but I'm pretty sure a bank would not take this into account when deciding whether to give me a mortgage or not.

£350 on electric, gas, tv licence and water?!


That's where your figures are wrong...


TV Licence £12
Water - Approx £30? (depends on the geographic footprint)
Gas ?electric £60-70 - shop around
Internet - £20
House insurance £15 (at a push!)

seabass90

dinkylink wrote: »

I'm sure someone has advised previously on this board that you need to earn at least £25k to get a btl mortgage. I don't think I'm imagining it...

You're not wrong, I have seen this too on a few different websites! Hence my question about adding a parent onto the mortgage.

seabass90

Guest101 wrote: »

£350 on electric, gas, tv licence and water?!


That's where your figures are wrong...


TV Licence £12
Water - Approx £30? (depends on the geographic footprint)
Gas ?electric £60-70 - shop around
Internet - £20
House insurance £15 (at a push!)

Sounds like I'm over estimating?

Sorry! I meant £250* (ish) My figures came from these estimates:
Tv licence £12
Water £40
House insurance £50
Electricity/gas £95
Tv/internet £45

cloo

I'd definitely go for 'lodger' - it's what I did in my first house; I didn't particularly need to financially, I just didn't want to live on my own. Especially a good idea now that the tax situation is much less favourable to landlords - if LLs have a sizable mortgage now they can be left in the red with the loss of relief for mortgage repayments.

Guest101

seabass90 wrote: »

Sounds like I'm over estimating?

Sorry! I meant £250* (ish) My figures came from these estimates:
Tv licence £12
Water £40
House insurance £50
Electricity/gas £95
Tv/internet £45

I think that's far too much.


£600 on House insurance seems like a lot (though if you're in a flood risk area or something similar....)


TV/Internet you should get for £20-25 (but if you have additional subscriptions like sky sports...)


But it depends how penny pinching you are

Person_one

seabass90 wrote: »

Thanks, you're definitely right about getting a residential mortgage with a 35 year term. However I'm imagining I'm going to find it difficult to manage by myself on my salary with a £400 mortgage? I'm estimating council tax (with single person discount) to come to £100. Electricity, tv licence, Internet/phone, water and house insurance etc I've estimated to come to around £250? Then I've got my car (£100), car insurance (£25), phone (£10) petrol (£150) and private treatment (£100). I make that £1135, leaving me with 265 per month for food, savings, socialising and any clothes/toiletries! It's just not enough.

Getting a lodger would definitely fix this situation but I'm pretty sure a bank would not take this into account when deciding whether to give me a mortgage or not.

The reason I felt able to advise is because I'm in a similar situation!

I earn slightly less than you (but do have a shift allowance that bumps my wage up to about £1500pm.

I live alone in a small 3 bed semi, pay £400pm on my mortgage of just over 100,000, get the single person discount for council tax, and manage absolutely fine. I save each month into separate pots for things like annual insurance renewals, vet bills, MOT, holidays (cheap ones!) and an emergency fund for the unexpected. I don't spend extravagantly and I budget for every penny that comes in, but I don't live like a hermit either.

£100 a month on a car and £100 for private medical treatment seems unnecessary though, can you get out of those before looking at buying a place? I have a 9 year old car that is going strong and has cost me less than £500 in repairs in the 6 years since I bought it second hand! If your private treatment has finished and you're now just paying the bill, it may make more sense to pay it off from your savings rather than paying interest on a finance plan.

heuchera

seabass90 wrote: »

Situation: 20-something living with parents. Working full-time and earning 23k per year. 'Excellent' credit rating.
Currently have around 52k saved and want to use it to get on the property ladder.

My main problem is that I'm a single buyer and my salary (around 1400pcm after tax) is not the greatest for me to live comfortably by myself with a mortgage. Unfortunately, property prices are rising faster than I can save and so continuing to stay with my parents to save wouldn't make sense.

What would be my chances of getting a Buy to Let mortgage as a FTB? I could go ahead and get a normal FTB mortgage now, but I would have absolutely no money left for furniture, fees, etc as I want to throw every penny of that 52k into my deposit to keep my monthly payments as low as possible.

Meanwhile if I were to get a Buy to Let mortgage, I could afford a nice attractive £140k 2 or 3 bed house in a desirable area with good rental prospects. Even with just a £35k deposit hence leaving me with money in the bank, my monthly mortgage payments would be around £475 and it would be quite easy for me to get £650pcm in rental income. If I were to get a 2 year fixed BTL, I could carrying on living with my parents (they don't charge me rent) and saving lots of money for furniture, refurbishment money etc and hopefully progress in my job too. Then in 2 years time, I'm hoping (!) I could re-mortgage as a 'normal' residential mortgage and move in myself?

Does this sound like a feasible option? Obviously the two glaringly obvious bad points are 1) my salary (I.e below 25k) and 2) the fact I don't own any properties. Could I get around this? E.g if one of my parents who own their house outright would go on the mortgage?

There is no need for one single person to have a 3 bedroom house! I'd go for something smaller, or a flat. Got to cut your coat according to your cloth.

Thrugelmir

Open A Help to Buy ISA with the Halifax. 4% interest and a bonus of 25%. Far less risky.