advice on buy to lets

try_harder

hi new here and first post -could anyone tell me if it is possible to purchase a buy to let with no or very little income but with a 25 percent deposit -my husbands income is not very high and is used to pay the mortgage on our home -i have asked at our bank and they say its based on the rental income but to bring all details of his income which sadly would not be anywhere enough to cover two mortgages any help would be great thank you

HappyMJ

try_harder wrote: »

hi new here and first post -could anyone tell me if it is possible to purchase a buy to let with no or very little income but with a 25 percent deposit -my husbands income is not very high and is used to pay the mortgage on our home -i have asked at our bank and they say its based on the rental income but to bring all details of his income which sadly would not be anywhere enough to cover two mortgages any help would be great thank you

You don't need an income to get a BTL mortgage. Well technically you do. You need an income of at least £1 per year. i.e you are not making a loss from self employment.

Do you really want to get into the BTL business? I am a landlord myself and there really isn't that much money in it. I barely make £30 profit from £600 monthly rent and that's more because I don't have full comprehensive buildings insurance. I do not have any accidental cover and I don't have insurance on the boiler and heating system nor do I insure the plumbing and drains and I don't insure the electrics. I also do not have rent guarantee insurance. You've got to spend quite a bit of time on the management of the property which is all unpaid. You will also have to pay an extra 3% of the purchase price on a second property which could wipe out a lot of profit.

try_harder

thank you -i can see your point as to the fact that its very little profit after all the outgoings -i was thinking more of the value of the property going up in value over the years as has our home and as we have no pension was hoping it would be a better choice

theartfullodger

Many - but not all - B2L mortgages require significant non-rental income - £25k last time I tried.

Speak to a couple of specialist B2L mortgage brokers...

If hubby has little income the risks of a B2L (no rent for 7 months {& don't believe the "rent guarantee} stuff or major repairs unexpected) may not be for him. You need spare cash in that game.

marksoton

try_harder wrote: »

but to bring all details of his income which sadly would not be anywhere enough to cover two mortgages

So it's a no go before you've even started then!

HappyMJ

try_harder wrote: »

thank you -i can see your point as to the fact that its very little profit after all the outgoings -i was thinking more of the value of the property going up in value over the years as has our home and as we have no pension was hoping it would be a better choice

The value of your home goes up because you maintain it. You change the carpet, you paint the walls, you change the kitchen and the bathroom when required, you replace the roof when it needs it, you fix the boiler and change it every so often. The value of land will increase with inflation and as demand for your land increases over time but the value of the house will actually depreciate unless you spend money maintaining it.

Gambling on capital growth isn't really recommended. I live in a flat. It was purchased as a new build in 2006 for £130,000. It's now 10 years later worth no more than £110,000. The market was supposed to have recovered to pre GFC values so what's happened to it. The lease is 10 years older, it's worn out, there's newer new builds going up, the demand for it is much lower. Could you handle a loss like that? If my landlord put a 20% deposit down they would have lost the lot.

try_harder

thank you -i have been reading through some of the buy to let posts on here and it does sound a lot more complicated than i thought especially the emotional side of it all im not very tough and not sure if i could cope with all the problems that may arise from tenants and agents etc pity it sounded good in theory -i will have a look at some other ways of saving for a pension that will hopefully be less stressful

HappyMJ

try_harder wrote: »

thank you -i have been reading through some of the buy to let posts on here and it does sound a lot more complicated than i thought especially the emotional side of it all im not very tough and not sure if i could cope with all the problems that may arise from tenants and agents etc pity it sounded good in theory -i will have a look at some other ways of saving for a pension that will hopefully be less stressful

Diversify as much as possible. Putting all of your money on one investment isn't a good idea.

I have regular savers....lots of them...every one possible earning 6% some at 5% and some at 4%. I also have current accounts none of which earn less than 3% interest. That earns me more profit that my old house which is now let out as a BTL.

I would save cash first until you can't put any more in any of those accounts whilst also contributing as much as you possibly can to an employer pension scheme. Many employers match contributions and if they don't the government will add some as contributions are made before tax. I personally don't like pensions but they are very tax efficient. The money in your pension should be invested into stocks and shares. If you don't like pensions then how about stocks and shares ISA invested in a diversified portfolio.

try_harder

thank you very much for all your help i have opened up a tsb plus account paying 5%and a regular savings account also paying 5%also now looking at the isas -i have never been much of a saver having always spent all our money in the past but have been left a little money by a relative and wanted to put it to good use and not waste it as i usually do many thanks

tlc678910

Hi,

If you are concerned that the money may ebb away how about paying it off your own mortgage? (You need to check if early repayment charges will apply)

You could then set up regular savings from the money you are saving on the mortgage.

Tlc

try_harder

hi thank you tic678910 yes that is another option -my list is getting ever longer lots of good ideas now -thank you all