Confused please help - buying a house

saajan_12

Vaderkad84 wrote: »

Could you kindly explain how it would make it difficult eventually buying my own home if i did consider buying a property to rent out first?

You'll face issues at both stages: even if you do find a lender, you'll have a very narrow choice and likely be stuck with a very high rate.

1) Buying first rental house
For a rental property, you need a BTL mortgage which typically requires you are
- home owner
- over 25 years
- 25% deposit
- higher interest rate

2) Buying residential home later
As you already own a property, you'll
- pay additional 3% stamp duty on the entire purchase price
- not benefit from gvt FTB schemes to help with deposits etc
- lower salary and rental income NOT usually taken into account.
- BTL mortgage MAY reduce your affordability if rent and mortgage payments are no longer in line

JoJo1978

Agree with other posters. Would also add that any house you buy now as FTB with residential mortgage may suit you, but could be totally unsuitable as a rental property if you rent it out later on unless you do a lot of research and are prepared to compromise on your own wishlist to buy a house that's suited to being let out.

You hint that you are also at the moment caring for parents. Would you want the additional responsibilities of being a landlord on top of that? I became an accidental landlord in 2008 because I couldn't sell and it was costly to pay agents but I didn't have the time to deal with the responsibility.

Vaderkad84

getmore4less wrote: »

If you get a mortgage based on the high salary how are you going to afford in on the lower salary?

Sorry i meant the higher salary would allow me to get a better mortage so i though i would buy a house whilst i earnt well

Vaderkad84

saajan_12 wrote: »

You'll face issues at both stages: even if you do find a lender, you'll have a very narrow choice and likely be stuck with a very high rate.

1) Buying first rental house
For a rental property, you need a BTL mortgage which typically requires you are
- home owner
- over 25 years
- 25% deposit
- higher interest rate

2) Buying residential home later
As you already own a property, you'll
- pay additional 3% stamp duty on the entire purchase price
- not benefit from gvt FTB schemes to help with deposits etc
- lower salary and rental income NOT usually taken into account.
- BTL mortgage MAY reduce your affordability if rent and mortgage payments are no longer in line

Thanks i was unaware i already had to be homeowner when applying for a btl mortgage