Buy to let mortgage

reehsetin

any help will be much appreciated, just wanted to know if i plan to buy a house, and rent it out for a year or so untill im ready to move in, will it mean i would have to get a buy to let mortgage even though i'd only be renting it out for a year?

thanks

Zammo

Why don't you just wait a year to buy it and then move in. It's not as if prices are going up anymore.

reehsetin

it is an option and what we will do if its going to work out really expensive in the long run but if i can i want to get my house now, psychological thing i guess and just so its there for when i want it

Doozergirl

reehsetin wrote: »

so its there for when i want it

Expensive luxury. Especially if a tenant trashes it for you first.

You would need a BTL, yes, thought you'll find it hard to obtain a BTL mortgage if you don't already have a residential mortgage.

reehsetin

i know just checking my options for now

hmmm so im screwed then,

IveSeenTheLight

Doozergirl wrote: »

Expensive luxury. Especially if a tenant trashes it for you first.

You would need a BTL, yes, thought you'll find it hard to obtain a BTL mortgage if you don't already have a residential mortgage.

Three points.
1) Pure speculation that a tenant "might" trash a property. If proper reference checks are carried out then this is dramatically reduced in chance.
2) BTL's are no longer required to be secured on a residentatial property. They are secured on a lower LTV and expected rental rates.
3) You may be able to get a residential mortgage as some lenders will allow periods of letting out the residential home. You will need to check though as usually you would have a residential mortgage for a period of time and then request from the lender to rent out for a year or two if your circumstances were that you were leaving the area and returning later.

PasturesNew

Also, how much deposit do you have?

As a rule of thumb, you'd need a bigger deposit for a BTL than for a residential mortgage nowadays.

What sort of figures are we talking about?
How big would the deposit be? the mortgage?
How much rent is being asked in that area for that size of property?

I'mcomingbackasaman

Have you thought of buying a large enough property so that you can rent a couple of rooms out (separate front doors etc.) then you can keep an eye on your investment make sure it doesn't get trashed. I'd always ask for references if I didn't know the person I was thinking of having as a tenant.

reehsetin

IveSeenTheLight wrote: »

Three points.
1) Pure speculation that a tenant "might" trash a property. If proper reference checks are carried out then this is dramatically reduced in chance.
2) BTL's are no longer required to be secured on a residentatial property. They are secured on a lower LTV and expected rental rates.
3) You may be able to get a residential mortgage as some lenders will allow periods of letting out the residential home. You will need to check though as usually you would have a residential mortgage for a period of time and then request from the lender to rent out for a year or two if your circumstances were that you were leaving the area and returning later.

sorry whats LTV?

ok so it may be possible but seems like we'd need a big deposit and very good credit score,

we're still looking at what property in particular so havent looked at rental rates but think we would only go for it if the rental rates were at least say 85% of mortgage payments including letting agent fees
figures we've been working on are roughly 30-40k deposit depending on how much cash we'd need to fix up the place and £180k ish max on a house, for that we've seen a couple of nice 3beds with gardens, nice area, near the train station


wouldnt really be keen on a tenant, me and OH are very much looking forward to getting 'our house' plus point is we arent looking to move in straight away

Doozergirl

IveSeenTheLight wrote: »

Three points.
1) Pure speculation that a tenant "might" trash a property. If proper reference checks are carried out then this is dramatically reduced in chance.

Yes, pure speculation. But you're probably not going to end up with a house in better condition than when you bought it after you've let it. If you don't own the house at all and wait, like most people do, there's a 0% chance of someone wrecking your dream or not paying the mortgage for you.

IveSeenTheLight wrote: »

2) BTL's are no longer required to be secured on a residentatial property. They are secured on a lower LTV and expected rental rates..

I'm not talking about what you secure the loan against, I'm talking about the opportunity to secure the right loan in the first place. As little as 6 weeks ago, my broker was talking about it being hard to obtain a BTL mortgage if you do not already have a residential one.

IveSeenTheLight wrote: »

3) You may be able to get a residential mortgage as some lenders will allow periods of letting out the residential home. You will need to check though as usually you would have a residential mortgage for a period of time and then request from the lender to rent out for a year or two if your circumstances were that you were leaving the area and returning later.

Some lenders will allow this after a period of time, not straight away as residential rates and LTVs are preferable to BTL rates so if it blatantly looks like you've taken out a residential mortgage only to change straight away, then answer is likely to be a point blank no. They've also tightened up massively, and if your figures aren't good enough for BTL, they're saying no. We've had people on the board with perfectly legitimate reasons, who have been refused permission to let by their lenders.

PasturesNew

reehsetin wrote: »

sorry whats LTV?

Loan To Value. How much are you borrowing? BTL like it to be 15-30% deposit.

reehsetin wrote: »

ok so it may be possible but seems like we'd need a big deposit and very good credit score,

Yes

reehsetin wrote: »

we're still looking at what property in particular so havent looked at rental rates but think we would only go for it if the rental rates were at least say 85% of mortgage payments including letting agent fees

Most BTL mortgages like the rent to be 125% of the mortgage

reehsetin wrote: »

figures we've been working on are roughly 30-40k deposit depending on how much cash we'd need to fix up the place and £180k ish max on a house,

£36k deposit on a £180k house is a 20% deposit, so that figure is doable, but you'd still be light on the rent-v-mortgage ratios preferred by most of about 125%

reehsetin wrote: »

wouldnt really be keen on a tenant, me and OH are very much looking forward to getting 'our house' plus point is we arent looking to move in straight away

Best to stay away from BTL then. It would prove to be too stressful finding/getting one and the sleepless nights wondering what they are doing in/to your house while you can't go in and see.

Just save for a year or so and buy a house for yourself when you're ready. Prices aren't rocketing up, so there's no urgency.