First Time Buyers advice needed

kenzie123

Hello

We currently rent in London. We have been trying to purchase a flat or house for two years with no success (we have had 3 offers go wrong in this time due to survey failures and seller issues)

We have now come to the realisation that we're not going to get a decent enough property (We now have a baby so our requirements have changed) for what we earn (£70K p/a) even though we do have a sizeable deposit of £60k.

Reluctantly we are now looking down the shared ownership route but have heard negative things about this. We feel there is no other option now as we don't want to leave London. We are from Manchester originally so our new plan is to do shared ownership here and then get a buy to let mortgage on a property back home in order to invest in a smaller property and also have the option of going back at some point in the future.

Is it possible to get both a shared ownership property on a first time buyer mortgage and also have a Buy to Let mortgage elsewhere?

Any advice would be appreciated

thanks

gettingtheresometime

I thought to have a btl mortgage you needed a 25% deposit? Also wouldn't you be liable for the higher rate stamp duty?

ACG

Im not sure on the rules of shared ownership, so I can not answer that but in terms of a second property/BTL - are you aware of tax changes recently and upcoming?

You will have to pay a higher rate of stamp duty on the second property (3% of the first £125k and 5% for aything of the next £125k). Also the rental income tax rules are changing gradually over the next 3 years.

At the minute, if you earn £500 a month in rent and an interest only mortgage is £100 a month, you can declare £75 a month as an expense, meaning you are paying tax on £425. Next year it would be £450, then £475 and then the full £500.

You could find you are hitting higher tax rates if you are not careful.

I am not trying to talk you out of it and I would suggest speaking to an accountant but im not convinced BTLs are for the average person anymore.

You also need a 20-25% deposit for a BTL.

katebl

Where in London are you looking to buy, could you not consider different boroughs or further out?

Cakeguts

I would suggest that moving back to Manchester now might be a good idea. If you have 60k in savings you could get quite a good house with that as a deposit in the Manchester area so you wouldn't need to earn quite so much. This is the problem with working in London. The salaries look really good compared to other parts of the country but because living costs are so high in particular housing you can't buy much with that bigger salary. You have the advantage of knowing where to buy in Manchester so that you can buy in a decent area

sparky130a

kenzie123 wrote: »

Hello

We currently rent in London. We have been trying to purchase a flat or house for two years with no success (we have had 3 offers go wrong in this time due to survey failures and seller issues)

We have now come to the realisation that we're not going to get a decent enough property (We now have a baby so our requirements have changed) for what we earn (£70K p/a) even though we do have a sizeable deposit of £60k.

Reluctantly we are now looking down the shared ownership route but have heard negative things about this. We feel there is no other option now as we don't want to leave London. We are from Manchester originally so our new plan is to do shared ownership here and then get a buy to let mortgage on a property back home in order to invest in a smaller property and also have the option of going back at some point in the future.

Is it possible to get both a shared ownership property on a first time buyer mortgage and also have a Buy to Let mortgage elsewhere?

Any advice would be appreciated

thanks

I don't know if the two are compatible legally but i really can't see it solving your problem.

The figures you mention don't suggest it could work...

hazyjo

katebl wrote: »

Where in London are you looking to buy, could you not consider different boroughs or further out?

Agree. What is your budget (up to £350k-ish or less I'm guessing?), where are you hoping to buy, and what stations do you work near?

Jx

kenzie123

hazyjo wrote: »

Agree. What is your budget (up to £350k-ish or less I'm guessing?), where are you hoping to buy, and what stations do you work near?

Jx

Thanks - yes you're right thats our budget - looking in East London ideally on central line.

The commuter belt appeals but we do worry about being so far out and journey times, also knowing that Network Rail can be unreliable puts us off but realise we need to compromise.

Now we have a baby a house is desirable but again know our budget can't stretch that far if we want to be closer to London.

I would say at least Zone 4 or 5 in a safe area with good schools.

kenzie123

katebl wrote: »

Where in London are you looking to buy, could you not consider different boroughs or further out?

Yes have considered this - the right property hasn't come along yet.

Looking East London, don't want to go TOO further out ideally but understand we may have to now

kenzie123

ACG wrote: »

Im not sure on the rules of shared ownership, so I can not answer that but in terms of a second property/BTL - are you aware of tax changes recently and upcoming?

You will have to pay a higher rate of stamp duty on the second property (3% of the first £125k and 5% for aything of the next £125k). Also the rental income tax rules are changing gradually over the next 3 years.

At the minute, if you earn £500 a month in rent and an interest only mortgage is £100 a month, you can declare £75 a month as an expense, meaning you are paying tax on £425. Next year it would be £450, then £475 and then the full £500.

You could find you are hitting higher tax rates if you are not careful.

I am not trying to talk you out of it and I would suggest speaking to an accountant but im not convinced BTLs are for the average person anymore.

You also need a 20-25% deposit for a BTL.

Really useful thank you - we knew about the higher deposit but not about the recent tax changes.

From yours and other comments it looks like this isn't possible for us - we do have the deposit but BTL now sounds quite complicated.

LadyL2013

Do you have to live in London?


There are plenty of nice areas with decent houses for your budget in commuter towns outside of London. Look at towns with the High Speed and fast trains in to London. many Londonites I know how now moved out because they can get more for their money and still get into work quickly.