Approx how much would monthly repayments be on a BTL mortgage at £47k?

silaslang

Me and my partner are in a situation were we cant afford to live anywhere decent to raise our child. I have managed to save £8000 towards a deposit but all the decent houses are way out of what we could afford ( Were both on minimum wage). We are renting a property now in a fairly nice area at a bargain £80 a week but was thinking of rather than trying to purchase a property at £55000 we could maybe go for that priced property on a buy to let and rent it out and stay in our current property.

We are hoping that the rental income on the £55000 property with a BTL mortgage would cover the monthly mortgage payments so we could at least get our foot on the ladder.The mortgage lenders would let us have £47000 and the rest would be our deposit.

Any advice would be hugely appreciated.

Ian_W

:eek: You've done really well to save £8k in the circs you describe and I do understand what you're trying to do and applaude your initiative BUT [and that's a really, really big BUT] I think you're taking a very BIG risk with the capital you've got together and possibly your credit rating for years to come.

Most people are saying the figure for BTL don't add up at present, too many of them leading to lower rents that don't cover all the mortgage and expenses associated with letting. Many doing it now are banking on profits from future property price increases which in the longer term [but not any time soon] they may well see. However they're covering any shortfall from their earnings - can you afford to do that, for example if you have a couple of empty months when you can't get lodgers? If you can't, the property potentially would be repossessed, you'll lose your £8k and your credit history will mean higher charges for loans & mortgages for years to come. In your circs it's [IMHO] a very high risk strategy with a poor likelyhood of a decent return any time soon.

Additionally, I think most BTL mortgages require at least 15 and most 25% deposit which you don't have. If you want to have a look at rates, deposits etc go to the Mortgage Section of the site and have a look at Best Buys on Charcoal's and L&C.

silaslang

Thank you for the quick reply. What would happen if at some point I decided to move into the property myself. Can the mortgage be changed from a BTL to a standard one?

herbiesjp

Yes, as long as your income could satisfy the loan repayments (and meet other loan criteria of new lender)

AuntyJean

I am trying to weigh up the pro's and con's of buying my 1/2 of the marital home when I divorce.

I have looked at BTL and have taken lots of advice from this forum.

The house is worth £130,000. I would have to get a BTL mortgage for £65,000. but having added on costs to cover redecorating, re-carpeting etc. I am considering a mortgage of £75-80K. INTEREST ONLY would be £345 pm

The letting agents I have spoken to reckon I could get £595 pm for the property. They want at least 10% + VAT to manage it (inventory in/out, vet tenants, collect rent etc.) On top of that there is the annual gas/elect/fire safety check, read meters etc.). Then, I have to consider replacing the kitchen, central heating and bathroom refurbishment at some point over the years. Add to this carpets throughout and curtains, lampshades, redecoration This is all taking into consideration letting an unfurnished property. Then you will need buildings insurance. Then, allowing for 2 months empty per year, I worked it out that for an income of £7,140 pa the outgoings would amount to £9,235 pa averaged over 10 years.

At the end of 10 years I would still owe the £80K.

Also, BTL mortgages are at higher interest rates than 'normal' mortgages. Don't forget, when you own a property, you have all the maintenance costs that go with it which you don't have with rented property so, if you do buy your own house, you have to ensure that it is not going to need any major work doing to it (roof, central heating etc.).

I personally would suggest that you hold fire for a while, continue to save and see what the property market does in the next year or two. The general opinion is that property prices are stable whereas your wages are likely to increase slightly over the next two or three years.

Good Luck.