Bigger House + Lodgers, or Buy to Let

[Willeh85]

I own my own house which is a two Bed semi-detached bungalow. It's a nice size but not ideal in my eyes to share with a lodger.

I've set myself a 15-20 year plan which involves putting down deposits for a series of buy to let properties and building up a portfolio.

Which brings me to my conundrum for the early parts of my plan.

I'm currently saving around 800-1000 a month towards the deposit for my first buy to let property, which would see me on target for about three years to save the deposit needed. At this point I would also be due to remortgage my current property.

So for the early stages of the plan what would you do out of the following two options:

• Make over payments to the mortgage (within permitted overpayment allowance) to build extra equity and then look to move to a larger property that would allow myself and two lodgers to live in comfortably, and then continue saving for the buy to let properties or;
• Keep saving and have no lodgers at my current property, and purchase the buy to let, continue saving deposit for the next one.

I'm rather tempted by the first option given that I'd be moving to a bigger property and be covering my own mortgage whilst also saving for the buy to let. Over to you.

[Willeh85]

Thanks for the responses chaps, it would seem the general consensus is to go with the buy to let and not get a lodger.

I do like my current house its a suitable size for me on my own, but I have PH aspirations so I would like a house with a larger garden to build a garage in.

Although I do quite like the idea though of the Air BnB and occasionally opening up my home to a guest for a night or two.

It's like having a lodger but can then turf them out after a day or two and I'd technically only need to fill 7 days a month to cover my mortgage. My current spare room is suitable for a night or two but I think a permanent lodger would soon grow tired of it and move on.

[Willeh85]

Rangeroverover said:

Be a bit careful, don't go down the route of re-mortgaging on your main house and using that cash as a deposit for a BTL, lenders don't like it. If you need to do that leave at least 6 months from drawing the cash down until you apply for a BTL mortgage

Oh I wont be remortgaging. The two will be entirely separate and the cash for the deposit will come from savings.

[Willeh85]

sideways sid said:

Not sure what kind of value you're considering, but the cost of moving will swallow most of your first year's rent from a lodger and potentially several years worth if up in the 4% Stamp Duty band.

Next house would be priced £250 000 or less. Right now the prices of the houses I would look to move to are £215-230 000. However, I'd be looking to stay there 10 years minimum.