Unsure of BTL options whilst renting.

Bulla

I'm currently renting a place whilst contracting and moving around the country but would like to tie some money up in property for the next few years as I move around.

If I were to buy a property with the view of renting it out am I right in thinking that I'd only be subject to the First property rates of Stamp Duty as it's the only place I'd own ?

I know it means lower returns each month but is there any other reason why I shouldn't opt for repayment rather than interest only Mortgage ? My plan would be in 2 to 3 years to either move in myself or sell it and buy another place to live permanently ? Paying off a mortgage seems like a better idea than have more cash flow each month ?

AnotherJoe

In the first few years you'll pay little off, so maximise your profits and minimise your outgoings by having an interest only mortgage. Why tie yourself down to higher repayments ? If you have some spare money you can always pay off as a lump sum as you go.

Yes you'll just pay normal SDLT.

Bulla

AnotherJoe wrote: »

In the first few years you'll pay little off, so maximise your profits and minimise your outgoings by having an interest only mortgage. Why tie yourself down to higher repayments ? If you have some spare money you can always pay off as a lump sum as you go.

Yes you'll just pay normal SDLT.

Thanks Joe.

dimbo61

The extra 3% stamp duty is the least of your worries.
To get a BTL mortgage you need at the least a 25% deposit and money for fees and other costs.
Lenders also like to see you own your own home.
You need to earn over £25,000 with secure permanent employment.
With the new tax relief rules coming into effect over the next few years it will be harder to make the figures stack up.125/135% rent to mortgage at 5/6%.
I would save for a deposit and buy a home for yourself first.

Bulla

dimbo61 wrote: »

The extra 3% stamp duty is the least of your worries.
To get a BTL mortgage you need at the least a 25% deposit and money for fees and other costs.
Lenders also like to see you own your own home.
You need to earn over £25,000 with secure permanent employment.
With the new tax relief rules coming into effect over the next few years it will be harder to make the figures stack up.125/135% rent to mortgage at 5/6%.
I would save for a deposit and buy a home for yourself first.

Hi Dimbo,

I've actually got about 35% deposit and earn more than 25k. My issue is that I'm having to work away from my home town most of the year and so renting local to the project I'm on whilst I do. If I bought my own home it would just be sat empty so I thought a better idea would be to buy it to let out until I'm working back locally again in 2 to 3 years time.

Caz3121

...then you just need to find a lender that allows you to take a BTL without owning your own home