1at Buy to let...

goldenchris

I hope that somebody may be able to give me some advice.

I am looking at purchasing a propery in the north east at around the 80k mark, value above 90k and through structured financing, will only need to put around 3k towards the deposit.

I have heard that on a B2L it isn't so important on income multiples etc, but for the record earn around 32k per annum.

Property is cashflow positive when rented and am happy with the figures.

Now, I do not own a property and have around 4.5 k on credit cards, 1.5k overdraft and less than 1k on a loan to expire this year.

Credit score is ok, with no adverse, CCJ's etc to name.

To buy property, I will need to come up with a total of say 8k to finance the deal, which I am happy to do via a loan, and structure over a long period to max cashflow.

If I took out a loan, for say 15k, before I apply for property, will this seriously affect things?

I perhaps could have option to borrow cash from a friend and buy the property that way, and take loan out afterwards to repay friend, but will the house purchase seriously affect the chance of the subsequent 15k loan??

I know ther are no straightforward answers, but wonder if anybody has similar experiences or advice?

Chris.

fc123

Don't do anything for 7 days.
Log onto this forum and the sister house prices one, once a day for an hour and read as much as you can bear. Read all different types of posts.
Then re-consider your position.

FWIW I would say that you will end up over-borrowed. Just because the sums work out on paper, doesn't mean they will go to plan in real life.

Just 7 days.

Oliveru

Property only goes up and it's your first BTL- kind of like getting your foot on the ladder, then you get a second and a third- we are all doing it these days couldn't be happier!

silvercar

You won't get a BTL mortgage without owning your own place, full stop.

poppy10_2

silvercar wrote: »

You won't get a BTL mortgage without owning your own place, full stop.

Really?

mpsavuk

poppy10 wrote: »

Really?

Of course, the lenders will want some collateral they can call on in case the debt gets defaulted on. Wouldn't you if you were lending out 80k!!!

Pobby

Is this a wind up!

payingfornowt

goldenchris wrote: »

I hope that somebody may be able to give me some advice.

I am looking at purchasing a propery in the north east at around the 80k mark, value above 90k and through structured financing, will only need to put around 3k towards the deposit.

I have heard that on a B2L it isn't so important on income multiples etc, but for the record earn around 32k per annum.

Property is cashflow positive when rented and am happy with the figures.

Now, I do not own a property and have around 4.5 k on credit cards, 1.5k overdraft and less than 1k on a loan to expire this year.

Credit score is ok, with no adverse, CCJ's etc to name.

To buy property, I will need to come up with a total of say 8k to finance the deal, which I am happy to do via a loan, and structure over a long period to max cashflow.

If I took out a loan, for say 15k, before I apply for property, will this seriously affect things?

I perhaps could have option to borrow cash from a friend and buy the property that way, and take loan out afterwards to repay friend, but will the house purchase seriously affect the chance of the subsequent 15k loan??

I know ther are no straightforward answers, but wonder if anybody has similar experiences or advice?

Chris.

BTL Is a geared investment, if the price of the house falls you will be in negative equity if the mortgage+loan is 100% of the value. If the rental income covers 75% of the outgoings (loan+mortgage) on a monthly basis it might be worth it.

For the record my "friend" has a BTL property in negative equity and the rental income does not cover the mortgage & maintinence. Its throwing money down the drain.

Sorry to sound so negative but you should have a good think to see if the numbers stack up in an uncertain market.

Good luck, hope whatever you do works out.

silvercar

poppy10 wrote:

Quote:
Originally Posted by silvercar
You won't get a BTL mortgage without owning your own place, full stop.

Really?

mpsavuk wrote:

Of course, the lenders will want some collateral they can call on in case the debt gets defaulted on. Wouldn't you if you were lending out 80k!!!

Don't think this is the reason as the BTL could be for less than half the property value.

It is more of an issue that there would be no comeback on the borrower if the lender repossessed. The borrower could pocket the rent for months not pay the mortgage and disappear with no responsiblity.

BTL is a business, you are asking the lender to make a decision that you are capable of succeeding in this business, if you don't even have your own home to look after, how do you show you can look after another property?.

Before the credit crunch, they way round was to get a property on a residential mortgage, live in it for a few months then let it out. Then most lenders would give consent to lease (and you could make sure that you chose a lender who would). Nowadays its harder to get a mortgage in the first place and harder to get consent to lease where the mortgage isn't very clearly covered by the rental income.

Captain_Mainwaring_2

One assumes that you have taken into account your tax liability in all of this?

Unless this place is a real gift and being given away then there is no way I would borrow money for the deposit etc.

I think you should be very careful. Two months with no tenant and you ready for repo - how long can you pay the mortgage for if it isn't rented out?

Conrad

Chris the B2L mortgage can be done for a FTB, I've just done one!

Its unlikely it will be casahflow positive once you factor in all costs such as the lost interest as a result of taking your savings out of a savings account and the interest payable on the £15000 loan you intend taking.

Should you decide to take a separate loan it might be considered better to do this after you had a mortgage offer.