Buy to Let Mortgage - How to...

cheskahb

I am looking to invest in a house to rent out as a holiday home. The area I'm looking in has relatively inexpensive houses and they're close to national parks. I've done my research, don't worry. I should state that my dad has a holiday cottage, so I know the business.
I recently inherited a sum of money which would be enough for a 20% down payment on one of these properties. However:

• I have never bought a house, I live in a house owned by my father and I want to stay in this home for the foreseeable future. (Nice area, a lot of room, close to work)
• I am the director of a limited company, I pay myself around £20000, though could be more depending on the financial year
• I am 23, 24 early next year

I am lucky - I don't pay anything in terms of rent to my dad. I have zero debt and an excellent credit score. Everywhere I look, I cannot get a buy to let mortgage. I've looked at setting up a limited company to buy a house but the interest rates are higher and most need a guarantor for around £35000 (I believe).
Is there any viable alternatives? Or should I give up this dream currently? But what else would I do with my money that would have as much ROI.
I have thought about:

• Setting up a limited company to buy (anyone have experience and knowledge with this?)
• Somehow getting a joint buy to let with my father? (Is this possible?)
• Giving the money to my dad so that he could purchase a property and then somehow transfer the mortgage?

Any advice would be greatly appreciated!

[Deleted User]

cheskahb wrote: »

I am looking to invest in a house to rent out as a holiday home. The area I'm looking in has relatively inexpensive houses and they're close to national parks. I've done my research, don't worry. I should state that my dad has a holiday cottage, so I know the business.
I recently inherited a sum of money which would be enough for a 20% down payment on one of these properties. However:

• I have never bought a house, I live in a house owned by my father and I want to stay in this home for the foreseeable future. (Nice area, a lot of room, close to work)
• I am the director of a limited company, I pay myself around £20000, though could be more depending on the financial year
• I am 23, 24 early next year

I am lucky - I don't pay anything in terms of rent to my dad. I have zero debt and an excellent credit score. Everywhere I look, I cannot get a buy to let mortgage. I've looked at setting up a limited company to buy a house but the interest rates are higher and most need a guarantor for around £35000 (I believe).
Is there any viable alternatives? Or should I give up this dream currently? But what else would I do with my money that would have as much ROI.
I have thought about:

• Setting up a limited company to buy (anyone have experience and knowledge with this?)
• Somehow getting a joint buy to let with my father? (Is this possible?)
• Giving the money to my dad so that he could purchase a property and then somehow transfer the mortgage?

Any advice would be greatly appreciated!

Not owning your main residence will narrow down the number of BTL mortgages available to you but for holiday lets it's not a BTL mortgage you will need as those usually stipulate you need an AST (in England/Wales) which wouldn't apply to a holiday let. Holiday lets are getting into the territory of commercial lending which is a different kettle of fish altogether.

Have you spoken with a mortgage broker who specialises in holiday lets? If not that should be your next step. I can't see how setting up a limited company in this scenario would make obtaining a mortgage easier and your dad can't take out a mortgage and then transfer it over to you.

You will pay SDLT even if you're a first time buyer because you're not purchasing a main residence for yourself. If your father purchases jointly with you the higher rate of SDLT will apply. If you purchase via a limited company, the higher rate of SDLT will apply.

Are you sure you can purchase these cheap properties near national parks? Often there are restrictions on who is allowed to purchase such properties.

cheskahb

Thank you for your reply, I do appreciate it I will look up more of the commercial mortgage side and will speak to a specialist broker - it never dawned on me about AST. My research clearly hasn't been that good!
There are a few properties on the market, not an abundance, but I know where to look having lived in the area and with my family's background in holiday lets

[Deleted User]

cheskahb wrote: »

Thank you for your reply, I do appreciate it I will look up more of the commercial mortgage side and will speak to a specialist broker - it never dawned on me about AST. My research clearly hasn't been that good!
There are a few properties on the market, not an abundance, but I know where to look having lived in the area and with my family's background in holiday lets

I don't think the pool of holiday let mortgage lenders is that great and some such as Leeds Building Society aren't available to you direct so you need to go via a broker. You're 20% deposit might also be an issue. Using Leeds as an example again, their max LTV for holiday lets is 70%. That's to say you won't be able to find a lender but it will at the very least reduce an already small pool of lenders even further.

cheskahb

Lover_of_Lycra wrote: »

I don't think the pool of holiday let mortgage lenders is that great and some such as Leeds Building Society aren't available to you direct so you need to go via a broker. You're 20% deposit might also be an issue. Using Leeds as an example again, their max LTV for holiday lets is 70%. That's to say you won't be able to find a lender but it will at the very least reduce an already small pool of lenders even further.

This isn't something that I would need moving instantly so I may be able to save up extra %. I will definitely have to do research on a good broker for this.
I suspect that lots of people I know who are in this business may be doing it fraudulently!