Buying flat for son to use whilst at Uni

pogo16769

hi
son is away to uni and we are looking to get a flat, have looked at renting but cost much the same as buying. Have seen a flat around the £70,000 mark but the problem is we don't have much deposit, I could get 5% but would really be looking for 100% mortgages. As would be not be renting the flat to him, this would be a second home not a BTL. Can anyone tell me what my best options would be, any advise would be must welcome.

silvercar

Could you raise the money by taking a larger mortgage on your current home - either to raise the deposit or to fund the whole purchase?

Wake_up_call

At best it will be considered a second property so you will have a 3% stamp duty surcharge to consider as well.

Thrugelmir

pogo16769 wrote: »

As would be not be renting the flat to him, this would be a second home not a BTL.

How would you justify this a second home if you have no intention of occupying the property yourselves. What are your plans for the property once your son has graduated?

buglawton

The lender will classify it as a 2nd home.

pogo16769

Thanks for your replies, could fund deposit with extra from current house.
Stamp I have found that as it a second home would have to pay, not sure what the current rate is in Scotland at the moment. After my son has finished uni, my daughter may also go there so she could use it or I would sale the flat on after that.

dimbo61

Hi,
Buying and selling after only owning for 3 years could prove expensive when you take into account Extra stamp duty, survey, legal costs, management charges etc.
You have to hope that son get through his course and daughter also wants to go to the same university !
Many students want to enjoy the university experience of living in halls and then moving into a house together in a group of upto 4/5/6/7/8 and even 10.
If you bought a 2 bed flat your son would be the landlord with a lodger !
No student fees in Scotland ?

davidmcn

dimbo61 wrote: »

No student fees in Scotland ?

If you're Scottish, yes.

pogo16769

No if you live in Scotland

PField

If you borrow the deposited from your main home and get a BTL mortgage, you can get tax relief on the interest on the whole £70k not just the BTL amount. So if you rent the flat to your son and later on to your daughter for a small amount so you don't make a profit, you can claim tax relief on the entire loan (if you make a maker loss you can carry that forward to reduced any tax bill in the future). If your son could take in a lodger it would probably pay the interest on the whole flat ( around £200 a month) in its entirety.
So if you over pay a bit you may probably find you own the flat outright by the time your daughter finishes.

getmore4less

PField wrote: »

If you borrow the deposited from your main home and get a BTL mortgage, you can get tax relief on the interest on the whole £70k not just the BTL amount. So if you rent the flat to your son and later on to your daughter for a small amount so you don't make a profit, you can claim tax relief on the entire loan (if you make a maker loss you can carry that forward to reduced any tax bill in the future). If your son could take in a lodger it would probably pay the interest on the whole flat ( around £200 a month) in its entirety.
So if you over pay a bit you may probably find you own the flat outright by the time your daughter finishes.

On £70 k with interest starting at around £200pm to pay of over 6 years that bit will be an extra £850pm