Investing in property

[Deleted User]

Looking to invest in a cheaper part of the UK as it’s unlikely we will be able to buy a decent family house where we currently live.  

What are the chances of getting buy to let mortgage on a 60-70k property, we have savings to put down 20% deposit and around 5k towards Reno. I plan to do most of the work. 

Combined 60k income, currently renting- cheap and affordable. 

davidmcn

Difficult, I would have thought. BTL lenders prefer you to already own your own property, and expect at least a 25% deposit 

steampowered

This sounds like a bad idea to me, because you are using up the valuable benefits associated with being a first time buyer:

- You are using up your first time buyer stamp duty relief, which will make it more expensive for you to buy a property of your own.
- You will no longer be eligible to use the Lifetime ISA to save for a house deposit on your first home. That is worth £1,000 per year. For each £4,000 you put in to a Lifetime ISA, the government adds £1,000, for each tax year.
- If you wish to buy a property of your own in future, that will be a second property, so you will have to pay higher rate stamp duty (an additional 3% of the property price on top of regular stamp duty).

You need 25% deposit minimum for a BTL mortgage, plus money for things like conveyancing fees.

If your goal is to invest, you can do that by investing into a Stocks & Shares ISA. That is tax free and does not use up your first time buyer status.

Suseka97

Aside from the very sensible comments from other posters, my thoughts are why on earth would you want to be a landlord whilst renting, simply because you imagine that you will not be able to afford a family house where you live.  Why are you so attached to the area and can you not look further afield to somewhere that provides your family's needs and is more affordable ?

If you read up on the pros and cons of being a landlord and truly understand the expectations and legal implications of that - you may well think again!

AdrianC

Deleted_User said:

Looking to invest in a cheaper part of the UK
...
I plan to do most of the work. 

Really?

How far away are you looking, that you'll be able to drop everything and dive round if there's a problem?
Why can't you live there?

[Deleted User]

AdrianC said:

Deleted_User said:

Looking to invest in a cheaper part of the UK
...
I plan to do most of the work. 

Really?

How far away are you looking, that you'll be able to drop everything and dive round if there's a problem?
Why can't you live there?

Used to live in that area before moving down here. Have handy people we can trust to carry out maintenance etc. We can push to 25% deposit.  The harsh reality is, we may never be able to buy a house down here. 

Once the kids are older, we plan to move back to that area, hence the idea of buying now - if possible. 

I know it’ll be hard to get BTL mortgage considering we are not home owners, but there must be a way out. 

What if we get a guarantor?

Grumpy_chap

Deleted_User said:

Looking to invest in a cheaper part of the UK as it’s unlikely we will be able to buy a decent family house where we currently live.  

What are the chances of getting buy to let mortgage on a 60-70k property, we have savings to put down 20% deposit and around 5k towards Reno. I plan to do most of the work. 

Combined 60k income, currently renting- cheap and affordable. 

The OP needs to share a lot more information to allow full advice to be given:

• £60k income - is that £30k + £30k or £60k + £0k?  
• What is the current rent per month?  This will influence affordability.
• Where in the country do you live?
• Where in the country do you propose to get the BTL?  Flat?  House?  How many beds?

Based on what you have shared, this seems to be a not so bright idea:

• £70k property at 20% deposit.  Would mean £56k mortgage.  Most BTL require minimum 25% deposit
• If you are doing the renovation on a property in a different part of the country, how will you manage travel / accommodation while doing up the property?  Especially if there are different lock down rules to consider?
• While you are doing up the property, there is no rental income, but the mortgage repayments need to be made.
• If you are working doing the property up, how will you also work to maintain your income?  (The combined income of £60k will fall if you are not working at the job but doing up the BTL.)
• Renovation costs prior to first let are not considered as rental expenses but capital costs, so cannot be offset until sold (against CGT).
• First time buyer status goes into the rental property and when you eventually do buy a place to live, second property SDLT will apply.

Why is this the approach you wish to take?  In most parts of the country, and with a bit of flexibility, it is possible to get on the housing ladder from joint income £60k, though you will help yourselves if you save a bit more than the current £14k deposit that is available.  Very few people buy their "forever" family house as the first step.

[Deleted User]

Grumpy_chap said:

Deleted_User said:

Looking to invest in a cheaper part of the UK as it’s unlikely we will be able to buy a decent family house where we currently live.  

What are the chances of getting buy to let mortgage on a 60-70k property, we have savings to put down 20% deposit and around 5k towards Reno. I plan to do most of the work. 

Combined 60k income, currently renting- cheap and affordable. 

The OP needs to share a lot more information to allow full advice to be given:

• £60k income - is that £30k + £30k or £60k + £0k?  
• What is the current rent per month?  This will influence affordability.
• Where in the country do you live?
• Where in the country do you propose to get the BTL?  Flat?  House?  How many beds?

Based on what you have shared, this seems to be a not so bright idea:

• £70k property at 20% deposit.  Would mean £56k mortgage.  Most BTL require minimum 25% deposit
• If you are doing the renovation on a property in a different part of the country, how will you manage travel / accommodation while doing up the property?  Especially if there are different lock down rules to consider?
• While you are doing up the property, there is no rental income, but the mortgage repayments need to be made.
• If you are working doing the property up, how will you also work to maintain your income?  (The combined income of £60k will fall if you are not working at the job but doing up the BTL.)
• Renovation costs prior to first let are not considered as rental expenses but capital costs, so cannot be offset until sold (against CGT).
• First time buyer status goes into the rental property and when you eventually do buy a place to live, second property SDLT will apply.

Why is this the approach you wish to take?  In most parts of the country, and with a bit of flexibility, it is possible to get on the housing ladder from joint income £60k, though you will help yourselves if you save a bit more than the current £14k deposit that is available.  Very few people buy their "forever" family house as the first step.

Thanks for your contribution. 

£60k income - 32k & 28k, due to rise soon to roughly 35k & 29kWhat is the current rent per month?  £620 Where in the country do you live?  Norfolk Where in the country do you propose to get the BTL?  North, 2bed terrace.   

davidmcn

Deleted_User said:

AdrianC said:

Deleted_User said:

Looking to invest in a cheaper part of the UK
...
I plan to do most of the work. 

Really?

How far away are you looking, that you'll be able to drop everything and dive round if there's a problem?
Why can't you live there?

What if we get a guarantor?

It's generally a bad enough idea to guarantee an owner-occupier's mortgage - who's going to underwrite your lettings business?

Grumpy_chap

Deleted_User said:

£60k income - 32k & 28k, due to rise soon to roughly 35k & 29kWhat is the current rent per month?  £620 Where in the country do you live?  Norfolk Where in the country do you propose to get the BTL?  North, 2bed terrace.   

Living in Norfolk and having a BTL in "The North" seems difficult, especially if you wish to do your own renovation work and manage without an Agent.

With your salaries I would have thought getting on the housing ladder in Norfolk would be entirely possible.  Obviously Norfolk is a very large area and house price variance across the area is significant - maybe you can narrow down slightly?  (A bit like "The North" is a large area to be considering the BTL.)

What other financial liabilities do you have that mean you cannot simply save a bigger deposit and buy something nice?

• £200k in Norwich (for example - that is Norfolk after all) gets an acceptable choice of mid-terrace family homes.
• £60k combined income at 3 times multiple gets you £180k.  More may be possible, but best not to over-stretch yourselves.
• £14k deposit plus £5k renovation budget means total deposit available £19k
• You are only £1k short of the £200k target and 10% deposit (90% LTV)
• If you can save a little more, so £30k, making 85% LTV, that will help.

SpiderLegs

Seems a bit of an odd plan. You have savings for a BTL but it’s ‘unlikely’ you can save more to buy an actual home in Norfolk.
why is it unlikely? You say your current rent is cheap and affordable.
you want a decent family home, but are going to buy a lower end property up north which you aim to ultimately live in.
your 60-70k btl is not going to earn you a fortune, going to remove your ftb benefits, take up time and effort and possibly generate more unseen costs.

Surely saving more, buying in Norfolk, not paying rent, building up equity, then selling up and moving back up north is a more sensible plan?