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Buying to let help!
HC94
Posts: 2 Newbie
My plan is to save up for a deposit to buy a flat with a standard 'owner occupancy' mortgage and live in it for about 5 years. I then want to buy a house to live in and change the flat's mortgage to allow me to rent it out. I've read about the additional fees I would pay to rent the flat and have read about a 'debt to income ratio' but not 100% sure what this is. I don't have any debts and don't plan on getting a credit card/loan.
I just want to know all the things that I should consider/should know for this sort of plan - if anyone can help. I've googled a lot and there is a lot of information out there, so I'm after a simple explanation of what would be required
I just want to know all the things that I should consider/should know for this sort of plan - if anyone can help. I've googled a lot and there is a lot of information out there, so I'm after a simple explanation of what would be required
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Comments
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You will have Debt once you take a mortgage for the flat.
Your question demonstrates that you are not really ready to become a Landlord, yet alone a BTL LL. Don't worry you will have 5 years to read up on the matter.
Meanwhile focus on purchasing a property you will be happy to live in, for the next 5 years.0 -
Mortgage = debt 0
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Usually to put a property on a buy to let mortgage you would need a 25% deposit in it, for the rent to be around 1.4 x the interest only mortgage payment e.g. £700 rent for £500 mortgage and you would need a wage of 25k plus. That’s currently of course - no idea if it will be the same in 5 years.
You might not need to put the flat on a buy to let mortgage short term if you can get consent to let.
If you are a higher rate tax payer (or your rental income makes you a higher rate taxpayer ) not all mortgage interest is deductible for your tax return. This makes it possible to let out at a loss and still have tax to pay so make sure you understand how the tax works
You will have to pay an extra 3% stamp duty on second property purchase, on top of ordinary stamp duty. You will also need a deposit for this property.
I wonder if the debt /income ratio is the fact that you can usually only borrow 4 and perhaps max 5 times your income on a mortgage? I gather some banks will ignore a let property (in terms of affordability) if it is self financing (at the moment).0
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