Can i buy a house with a 5% deposit and then rent it out after 2 years whilst travelling?

SpiderLegs

Angela_D_3 said:

harvoo said:

Comms69 said:

Maybe, but it sounds like a terrible idea. 

Thanks for reply, why does it sound like a terrible idea?

I did it in 1998,  best decision I’ve ever made.  Didn’t know it at the time obviously 

Excellent. Thank god it’s still 1998.

[Deleted User]

No mortgage lender is offering 95% LTV mortgages now anyway unless you go down the HTB Equity Loan route so it’s moot. If you did go down the HTB Equity Loan route then you wouldn’t granted consent to let because of the equity loan. 

As for the consent to let policies for an unknown lender several years down the line that’s anyone’s guess. 

babyblade41

Where's the "eek" emoji when you need it ???

AnotherJoe

Angela_D_3 said:a

harvoo said:

Comms69 said:

Maybe, but it sounds like a terrible idea. 

Thanks for reply, why does it sound like a terrible idea?

I did it in 1998,  best decision I’ve ever made.  Didn’t know it at the time obviously 

Very very different times then. None of what was around then is applicable now.  

Comms69

newsgroupmonkey_ said:

Comms69 said:

A s.21 is a landlord telling a tenant they plan to potentially evict at some point in the future. So not sure what i'm advising that isnt correct?.... 

And here we go again. I remember why I blocked you before.

An S21 has the following line:

You are required to leave the below address after [                                      ][1].  If you do not leave, your landlord may apply to the court for an order under Section 21(1) or (4) of the Housing Act 1988 requiring you to give up possession.

You are required to leave. That's as black and white as it comes. You have been TOLD to leave. Given a date.

Anyhow, I'm going to block you. I've only been back on this forum a few days and I've already found out why some people really need to get themselves a life. Bye

I have no idea who you are... awkward...

moneysavinghero

When returning to the UK I wouldn't be interested in evicting the tenant and the house remain for rent

If you are rich enough to be able to leave the house for rent when you get back, why do you need a 95% mortgage in the first place? Even if the government do manage to get 95% mortgages back in the market, they would be designed to help people who are struggling to get a single home that they intend on living in and not BTL by the back door.

newsgroupmonkey_

Lover_of_Lycra said:

No mortgage lender is offering 95% LTV mortgages now anyway unless you go down the HTB Equity Loan route so it’s moot. If you did go down the HTB Equity Loan route then you wouldn’t granted consent to let because of the equity loan. 

As for the consent to let policies for an unknown lender several years down the line that’s anyone’s guess. 

I've seen this mentioned a few places. Money Supermarket suggest that there are a few banks / building societies still offering 95% and they're not HTB or guarantor based.

What would preclude someone getting one of these mortgages?

saajan_12

harvoo said:

The aim wouldn't be to make any money it is just to stop wasting money by paying rent over the next few years.
In terms of managing the property whilst I'm away I have a relative who is a gas certified engineer who is willing to manage the property for me for free.

When returning to the UK I wouldn't be interested in evicting the tenant and the house remain for rent

Thanks 

Even if you can get the mortgages and get them to agree to CTL / BTL when you need it, the key is whats your aim. If its to save money vs renting, remember there are costs with owning as well. 

• mortgage interest
• lost return on deposit (you could invest it in an ISA / stock portfolio / bonds / whatever)
• repairs
• service charges & ground rent
• insurance
• SDLT (even if its zero on this one, your next one will be more expensive as you'll lose first time buyer status)
• Mortgage fees
• Solicitor fees
• Survey fees
• EA fees when you sell

The ones in bond are large one off costs, so for a long term home they might spread out to a lowish figure, but for a couple of years, you're unlikely to come out better off. 
When letting, especially from afar, you have additional costs for:

• higher BTL mortgage interest
• management / repair / redecoration costs (tenant may not treat it the same as you would, decoration may need refreshing before new person moves in, and whoever's managing for you may not put as much effort into finding cheap tradespeople, and just pick the first one)
• gas safety checks, EPCs, EICRs etc
• tenant finding / referencing
• legal costs of eviction (if they breach the tenancy or don't pay rent)
• Income tax (mortgage interest not fully deductible if you're higher rate, so you could actually make a loss from tax)

If you're managing the tenancy, you can select tenants to hopefully give you the least chance of legal troubles, and select tradespeople who are more economical, but from afar all these costs rise, which eat into your profit. 

[Deleted User]

newsgroupmonkey_ said:

Lover_of_Lycra said:

No mortgage lender is offering 95% LTV mortgages now anyway unless you go down the HTB Equity Loan route so it’s moot. If you did go down the HTB Equity Loan route then you wouldn’t granted consent to let because of the equity loan. 

As for the consent to let policies for an unknown lender several years down the line that’s anyone’s guess. 

I've seen this mentioned a few places. Money Supermarket suggest that there are a few banks / building societies still offering 95% and they're not HTB or guarantor based.

What would preclude someone getting one of these mortgages?

Have you followed any of the Money Supermarket links through to see what's on offer?  Barclays comes up but the only 95% LTV mortgage is the Family Springboard where a family member has to put up more money as security so it's not really a 95% LTV mortgage at all.  Tipton BS is similar.  Unless you go for a Family Assist mortgage where a family member has to put 20% of the purchase price into a Tipton savings account or accept a charge against their property for 20% the highest LTV is 85%.  Money Supermarket is being disingenuous by making it look like people can get a mortgage with just a 5% deposit because they can't at the moment.