Property Investment

Lagomera

Can I buy an investment property, without having to get a buy to let mortgage?. I have paid off the mortgage on my residential property that I live in, and so could easily manage the mortgage on a second property, without having to get tenants into pay mortgage.

ACG

What do you want to do with the investment property?

Lagomera

I want to sell it when I retire in aprox 20 years, and use it as a pension fund.

betmunch

He means once you have bought it.

Are you going to put tenants in it, or live there yourself?

minimike2

Why would you not want to put tenants in and have a regular income from it for those 20 years?

Are you saying you want to buy a house and leave it empty for 20 years?

Or am I missing something?

Lagomera

Neither, myself and my wife already have a property to live in. I just want to be able to buy a second house (without a buy to let mortgage) and maybe stay there from time to time, ourselves, if that makes sense. Its just that my wife has been stung by bad tenants in the past, and to add to that, buy to let mortgages have way more criteria to apply.

ACG

Your not going to be able to get a normal mortgage on a property that is only going to have someone staying there once in a blue moon.

There are lenders who will lend on it, but they will lend on it at rates pushing double digits with a 25% deposit.

If you buy the property for cash then you can do what you want with it. You could do that by lending against your residential property and using the money to put down on another property.

Just think about the potential issues:
Squatters,
A leak that goes unnoticed,
Damp,
etc etc.

Have you thought about putting money into an investment pot with others? https://www.lendinvest.com/property-crowdfunding/ - Its not something I have looked in to personally but you should get returns from the property/rental income without the hassle of maintaining it and dealing with tenants.

minimike2

So you are looking for a holiday home in essence?

There are a couple of ways of approaching it, on the basis of a holiday home but there is nothing to stop you applying for a residential mortgage on the property you are looking to buy if you are not going to put tenants in the property and intend to use it in this way. You choice of lender may be limited.

The running costs of both properties will form part of the affordability assessment of the mortgage. If the new mortgage and both properties are deemed affordable then it would be perfectly fine.

edit:

To add, I think this could be do-able without having to get anywhere near double digit interest rates. Far from it. But certainly a decent size deposit will be needed.

Lagomera

Thanks for the reply. I will be over the moon if I can just get a normal residential mortgage, and just treat it as a holiday home, with a view to maybe asking the mortgage company if we could put tenants in at a later date ( I know not all mortgage lenders will say yes without putting you on a different more expensive deal ) , if I can convince my wife to give tenants another shot.

minimike2

You need to be clear with your purpose from the start. You can't just chop and change and expect that to be OK.

It either needs to be tenanted or not. If it is then BTL will be the way to go.

If you intend to use as a holiday home and go down a holiday let route, then you need to consider location and how plausable it would be to use on that basis etc.

Have you looked at what you are actually wanting to buy / where / prices etc? At the moment your plan is not firm enough to be in any kind of position to make an application as no one would be able to go down the right route without more firm information as to your intentions. Also worth considering tax rules around holiday letting, if indeed you did let it... as these will be different to BTL income.

ACG

Completely agree.
Decide what you want, then its easier to say what is achievable or not.

However, if you are securig the loan against your own residential, it gives you the cash in the bank to do with as you please (more or less).