First time buy to let/ investment - advice please

caligulablushed

Hello, I have a question about the best way to invest in a first property/ whether it's a good idea.

Background:
- I have about 200k saved so far towards a deposit on a future London house purchase and available for investment in the meantime. My current accommodation with my boyfriend is indefinitely rent free.
- My own credit rating is 999 on Experian but my boyfriend appears to have an unexpected CCJ relating to tuition fees for a course he ended up not attending. This will expire in sept 2022. I'm assuming a joint mortgage before this point will either be impossible or with unfavourable terms
- I have a full Help to Buy ISA available - ie. Could get 3k back on 12k of savings. This is fairly useless given London price caps but I have looked into buying something outside of London to either rent out or appreciate over two years.

My question: what is the best strategy here for growing my 200K? 

- I could buy something up north below 200K outright or with a small mortgage to achieve the 3K help to buy bonus (value under 250k)
- Or I could buy something with a mortgage up to 500k to take advantage of the current stamp duty cuts and forgo the Help to Buy bonus
- What sort of mortgage would be best? I realise BTL has been made less profitable and that there may be future tax raids, but if it's my sole property are my options better? Would the best option be interest repayments only for a few years to extract rental income and then sell at a point that would either see no loss or a capital gain? Or would I be better off with a repayment mortgage and accruing equity? 

Grateful for any advice/ comments! I've only just started looking into this.

Cheers

moneysavinghero

BTL mortgages usually require you to already own a property. So you may be limited to those up North cash purchases. Don't think you will be able to use Help to Buy to buy a rental property.

caligulablushed

Thank you for your reply! I have seen that some lenders do offer BTL to first time buyers with a decent deposit. Any thoughts on most profitable avenue with Help to Buy Isa bonus removed from equation?

Savetowin

It may be more sensible to look towards owning for your own home before looking to make cash from others by renting. Being a landlord should be a responsibility that is taken seriously and empathetically.

MaryNB

Your credit score doesn't matter. A lender won't see it. Just make sure your credit history is good on all three agencies, not just Experian. A bank can use any or all of them.

At this stage you're very unlikely to meet the June 2021 SDLT holiday deadline. There is still some additional relief until the end of September - for FTBs between £500k and £925k so probably won't have a big impact on your purchase.

caligulablushed

Savetowin said:

It may be more sensible to look towards owning for your own home before looking to make cash from others by renting. Being a landlord should be a responsibility that is taken seriously and empathetically.

Thank you. My objective is not to exploit anyone. I simply can't currently afford to buy a house in London so i'm looking into ways to make that possible in the next few years.

caligulablushed

MaryNB said:

Your credit score doesn't matter. A lender won't see it. Just make sure your credit history is good on all three agencies, not just Experian. A bank can use any or all of them.

At this stage you're very unlikely to meet the June 2021 SDLT holiday deadline. There is still some additional relief until the end of September - for FTBs between £500k and £925k so probably won't have a big impact on your purchase.

Thank you. My credit rating is fine but my boyfriend's is awful because of the CCJ (he was not granted an AGP as a sole applicant when I did one of those rudimentary checks online, though I appreciate a broker might be able to find a lender). If he had a better rating we might be able to afford our own house now.

Do you know how long it takes to process a house purchase? I looked at an empty property in Manchester on Friday and it's available for immediate purchase. Though it's somewhere I wouldn't mind living myself if absolutely required, rather than necessarily the best investment. I haven't adjusted to looking with those eyes.

moneysavinghero

Average house purchase takes 3 to 4 months. 2 months is about the quickest you could hope for.

MaryNB

caligulablushed said:

MaryNB said:

Your credit score doesn't matter. A lender won't see it. Just make sure your credit history is good on all three agencies, not just Experian. A bank can use any or all of them.

At this stage you're very unlikely to meet the June 2021 SDLT holiday deadline. There is still some additional relief until the end of September - for FTBs between £500k and £925k so probably won't have a big impact on your purchase.

Thank you. My credit rating is fine but my boyfriend's is awful because of the CCJ (he was not granted an AGP as a sole applicant when I did one of those rudimentary checks online, though I appreciate a broker might be able to find a lender). If he had a better rating we might be able to afford our own house now.

Do you know how long it takes to process a house purchase? I looked at an empty property in Manchester on Friday and it's available for immediate purchase. Though it's somewhere I wouldn't mind living myself if absolutely required, rather than necessarily the best investment. I haven't adjusted to looking with those eyes.

You score/rating doesn't matter. Your history does. A lender won't see your experian score and experian doesn't grant mortgages. A lender will look at you credit file on any or all of the credit rating agencies and use that to do their own scoring/assessment. Each lender has different criteria. That's the score that matters and the one you don't get to see. 
You need to check Transunion (use credit karma for free access) and Equifax (use clearscore for free access) to make sure your info is correct and history is favourable on all 3. When I went to apply for a mortgage my info wasn't consistent across the three and it takes time to make corrections. 

If your boyfriend has a CCJ and you decide to buy together you should consider using a broker who will have a good understanding of which lenders will accept a customer with a CCJ. 

Average time to buy a house is 3 months. It has been slower with covid (mini SDLT holiday bubble, solicitors working from home etc). There will be a lot of people rushing to meet the extended June deadline. A lot of reports of surveyors with a month waiting time to do a survey. If you buy with cash you obviously won't have to worry about the mortgage application process but it's the conveyancing that takes the most time. 

AdrianC

caligulablushed said:

Savetowin said:

It may be more sensible to look towards owning for your own home before looking to make cash from others by renting. Being a landlord should be a responsibility that is taken seriously and empathetically.

Thank you. My objective is not to exploit anyone. I simply can't currently afford to buy a house in London so i'm looking into ways to make that possible in the next few years.

You have £200k to invest, which you might require access to in reasonably short order - ~3 months notice.

That is not the sort of timescale you can extract an investment from a residential let. It may take you several years to get tenants out and then sell a property. Meanwhile, you are wasting your FTB benefits on a property that's a fraction of the cost of the home you want to eventually buy.

And that's before we consider whether you'd get any kind of sensible return on your investment in a fully managed let...

There are plenty of far more suitable, lower risk investments for your money than paying somebody else to run your residential lettings business.
https://forums.moneysavingexpert.com/categories/savings-investments

caligulablushed

AdrianC said:

caligulablushed said:

Savetowin said:

It may be more sensible to look towards owning for your own home before looking to make cash from others by renting. Being a landlord should be a responsibility that is taken seriously and empathetically.

Thank you. My objective is not to exploit anyone. I simply can't currently afford to buy a house in London so i'm looking into ways to make that possible in the next few years.

You have £200k to invest, which you might require access to in reasonably short order - ~3 months notice.

That is not the sort of timescale you can extract an investment from a residential let. It may take you several years to get tenants out and then sell a property. Meanwhile, you are wasting your FTB benefits on a property that's a fraction of the cost of the home you want to eventually buy.

And that's before we consider whether you'd get any kind of sensible return on your investment in a fully managed let...

There are plenty of far more suitable, lower risk investments for your money than paying somebody else to run your residential lettings business.
https://forums.moneysavingexpert.com/categories/savings-investments

Thank you for your thoughts, particularly on losing my first time buyer benefit. These are the sort of sums I need to weigh up. 

What sort of timescale would make it feasible in your view? I would potentially be able to manage any property myself, as I'm dividing my time between Manchester and London. 

It's not just the rental earnings I'm considering though - I'm also wondering if house prices will rise faster than inflation and savings interest rates, meaning my deposit actually effectively gets smaller rather than larger over time. Ie/ whether a purchase now that I later sell a bit spruced up would allow me to keep step with the property market.