FTB or FT Tryer

Ougat

Good day


After reading and daydreaming this forums for a few months I finally decided to post.


My partner and I are living together renting in London. We live of my salary and saved up hers for the last year. We now have £20 000 saved up and are trying to get paperwork in order to go and see a bank/broker.


We are looking to buy further afield somewhere around Leeds and maybe as far as Durham. As an investment and a place to call our own and use when on holidays and weekends. We are looking at houses up to £70 000 maximum.


The main thing what makes us question ourselves is that I want her to buy the first property in her name only so when we have saved up again for a deposit (about two years) we can do the next one in my name ( save on taxes and all sorts of extra fees.)


There is also the thing that for the last 12 years I always had my salary paid into her account because when we got together I was double shifting and barely had chance to eat never mind doing any shopping or running around paying bills or even withdraw money. So my credit record is a big fat nothing as we also done everything in cash even when we bought cars. I actually had to go and open a bank account again a few weeks ago just to start getting things in my name. She did buy and spend on credit cards to build up her credit check and score. It is all looking good although she is on only £18500 salary per year.


I am willing to sign one of those deeds that state I wont lay claim to the house as it will be in her name only and she will still have her whole salary each month to pay the mortgage and start saving again for large down payments or even another deposit when I have upped my credit checks and scores over the next few years. Or even use it all somehow to get mortgage free asap. And then buy another one..


Will a lender think our situation is too complex or mixed/messed up to give her a mortgage?

Pixie5740

I think you're going to have problems convincing a lender to lend you money to buy a property nowhere near where you currently live or work. Are either or you from the Leeds or Durham areas? Do you have any local ties to the area(s)? It will look like you're trying to get a BTL property but without a BTL mortgage.

Where do you propose the second property would be? In London where you live and work or somewhere else in the country to spend weekends and holidays?

Ougat

OOhh, I see how that can be a problem. Most of the places we are looking at needs a fair amount of sprucing up and we plan on doing it ourselves getting it just right over a few months. Once it is done to how we like it we will move in permanently and my partner will look for a new job closer to home.. I am tied to working in London but only works half week so will be commuting back and forth when not on shift. We would rather not spend money on a place for other people to live in.


The second home will only be a reality if I can afford it by myself.. Still far off but the second one will most likely be on a buy to let basis.

Ougat

Thanks for answering Pixie.. I guess it is a tad bit complicated..

Ougat

I reckon we need to convince the bank/lender that we don't want to commit fraud somehow. No idea how do that. The only way is for us then to try and buy in both our names (my no credit record will be a problem) and when we want to buy another I can let her buy me out for a measly sum in a few years. That way we can avoid the extra charges and taxes? Or does it not work that way..?

Pixie5740

Why do you want to buy a second property? Why not pool your resources and buy the nicest home you can in the nicest area you can afford rather than limiting yourself to a £70k property? I know Leeds and Durham are less expensive to live in than London but you don't have to swing from one extreme to the other.

If you buy somewhere jointly then she can't just buy you out for a measly sum. She would need to be able to afford a new mortgage in her name only which would need to be large enough to at least repay the joint mortgage.

If I were looking to relocate I would start looking for a job in my chosen area(s) first. Then I would rent in the area for a while to get a feel for the place before fully committing myself to an area by buying a property. There's no point jumping in and buying somewhere if it means your commute to and from London becomes a massive PITA.

Ougat

A second property hopefully paid in full by the time I retire for an extra income to top up our pensions.


Oh and I meant she can buy me out once the place is paid in full.


During our daydreaming we want to get a mortgage for £50 000. Pay it off within 5 years. Then buy another and pay that one off also double quick (we are not aiming for mansions)


But right now we just want one house we can call our own. Where we can paint and do it up and not have a landlord's permission to change the toilet seat.


I would not commute on a daily basis. I basically do 4 on and 4 off so when I am on I stay at work as there would be no pint in me trying to go home. I also have a whole week off every 5 weeks and if I take my holidays correctly I spend half the year at home. So plenty time even if I do live far from work.


I am now rambling.. soz

Pixie5740

Why do you think a BTL would generate better returns than other investment vehicle(s)?

I understand that you wouldn't be commuting on a daily basis but you still want to find a location that has easy access to London. Once you've done your 4 days you'll just want to get home not be sat stuck in traffic or hanging around train stations waiting for a connection.

AnotherJoe

Ougat wrote: »

A second property hopefully paid in full by the time I retire for an extra income to top up our pensions.


Oh and I meant she can buy me out once the place is paid in full.


During our daydreaming we want to get a mortgage for £50 000. Pay it off within 5 years. Then buy another and pay that one off also double quick (we are not aiming for mansions)


But right now we just want one house we can call our own. Where we can paint and do it up and not have a landlord's permission to change the toilet seat.


I would not commute on a daily basis. I basically do 4 on and 4 off so when I am on I stay at work as there would be no pint in me trying to go home. I also have a whole week off every 5 weeks and if I take my holidays correctly I spend half the year at home. So plenty time even if I do live far from work.


I am now rambling.. soz

Why then buy a house for that? Why not rent a room for the work times, and have a nicer home?

Your whole approach is predicated on the somewhat outdated assumption that the best way to save for retirement is to buy additional houses and let them out, but the tax laws are changing and the legal duties for landlords increasing.

You also appear to be a high rate taxpayer which makes a pension very lucrative, but you would be passing up that free money and putting money into houses instead of pension on the hope / assumption that in say 30 years time the rise in the price of houses would outpace investment return and free government money, combined.

They might, but its a very risky approach and history says (and this is before all the changes on buy to let) that investments alone (thats before free money into pensions is added on) wins.

Add onto that, you are looking to massively overpay mortages which means putting earned money into a house, to save perhaps 2-3% interest. So, earn a pound, get just over 50p after taxes, save maybe 1p off mortgage. Plus an unknown amount added for house price inflation. Minus 28% tax.

Or, earn a pound, put it in pension, have a pound in investments, no money lost to taxman. Even when you take it out you'll still have 85p after tax. 50p vs 85p.

Ougat

@ Pixie


To be honest I (we) are total ignoramuses about investments and as you can see mortgages and all things that require financial brainwaves.


The weekly commute to work is done by at least 30 of the other guys I work with that lives all over the country. We have ample time off from work and when we are at work we often are just on call hanging about.




@ AnotherJoe


I am now 47 and sadly will have just less than 20 years pension money when I finally give up. I filled in the forms at work just last month to pay the maximum cash also into my pension per month. Hoping that will push it up.


As for buying shares/investments... I would not even know where to start.


Even just trying to think about getting a house/mortgage is already the stuff of nightmares.


We thought we would never be able to even think of buying a house as we both just looked at London prices. And it is no use to even try and explain to me how a stamp of a property without greenery outside even can be called a home. But then again we are paying a whopping silly rent each month towards someone else's mortgage.. I am taking notes and will carry on reading all (most of) the mortgage threads and once I am done start on other sections.


Thank you both for replying and answering. I really appreciate the feedback and am taking it all in.

AnotherJoe

Ougat wrote: »

I am now 47 and sadly will have just less than 20 years pension money when I finally give up. I filled in the forms at work just last month to pay the maximum cash also into my pension per month. Hoping that will push it up.

It certainly will if you are having £40k a year put into your pension ! Or did you mean the maximum your employer allows, which will likely be much less than that, and possibly insufficient ?


As for buying shares/investments... I would not even know where to start.
.

You don't have to but that's what's going on in your pension with your money whether you are involved in the choices or not.

Perhaps since ultimately hundreds of thousands (hopefully) of pounds will be invested for your benefit it would be a good idea to start learning about it yourself so you are competent to know if the right decisions are being made ? Pension companies have their own reasons for doing things not all of which are done for your benefit, even if it's as mundane as making "too safe" choices so you can sue them later, but ultimately losing you money,

They are also more likely to allocate by default their own funds (shock horror!) which will likely be poorer performing than alternatives such as trackers. Again, all this can be learned. Try the Monevator blog as a good place to start.