Mortgage Advice
Discussion
My company has been running for over two years now and in May/June our second years accounts should be filed to the IR. Currently i am living in rented accomodation and would like to put my first step on the property ladder. I would like to continue living where i am and (rental) yet buy a property to rent out. With the current state of affairs do you think this would be possible ? The propert i am looking at is 106k, i am debt free an have a deposit of approx 6k. My current salary is approx 25k although we have been paying ourselves a basic wage to cover NI and the rest has been made up in dividends. To cut to the chase am i going to struggle to do what i want to ?
My only thought would be when are you planning to buy something for yourself to live in? If I were buying at the moment I'd want to be pretty sure that it was a long term purchase as IMO there is every possibility that selling in the next two years might be problematic. You won't have stamp duty to bear in mind so the equation is helped by that.
If you are planning to buy something nicer for yourself in the next 18-24 months will you be able to raise the money if you still have the BTL, will the BTL rent cover the expenses?
These things may not be relevant to you but there would be considerations for me.
If you are planning to buy something nicer for yourself in the next 18-24 months will you be able to raise the money if you still have the BTL, will the BTL rent cover the expenses?
These things may not be relevant to you but there would be considerations for me.
Contact Andrew Graveson at Bright Oak on 0800 0437222. Yes, his normal day-to-day practice is debt advice, but he is also fully qualified to advise on personal mortgages. Just say that Paul from City Publications/City Marketing & PR said to give him a call and he should be more than happy to do some leg work for you.
So how much of a no no would it be if i were to tell them it was for myself yet i was then to rent it out ? Would it be a problem to start the ball rolling now or would i be better to wait until the second year accounts have been filed ? In our first year our wages were lower , as expected , approx 18-20k incl divi's. This will be a long term investment and i am not looking for any quick returns whatsoever.
Many thanks for the help so far.
Many thanks for the help so far.
Now clearly, I must tell you that seeking to give fraudulent information to your mortgage company is a very serious act. You would be in breach of your mortgage conditions and this would give the lender a right to demand repayment of the mortgage in full.
I had a, um, friend, who got stuck in negative equity in the 90's, they needed to move away from the area their property was in for work reasons but couldn't sell as they couldn't clear the mortgage. If they had notified the lender the lender would have wanted to put the mortgage on a commercial basis at not more than 75% LTV and my friend couldn't bridge the gap because of the negative equity.
My friend, chose to not tell the lender as they really couldn't see any way of dealing with the situation if they told the truth. The lender had no way of finding out, my friend rang them to change correspondence address which the Halifax did with no problem at all so there were no issues of post going to a wrong address.
Clearly my friend's action was wrong...
I had a, um, friend, who got stuck in negative equity in the 90's, they needed to move away from the area their property was in for work reasons but couldn't sell as they couldn't clear the mortgage. If they had notified the lender the lender would have wanted to put the mortgage on a commercial basis at not more than 75% LTV and my friend couldn't bridge the gap because of the negative equity.
My friend, chose to not tell the lender as they really couldn't see any way of dealing with the situation if they told the truth. The lender had no way of finding out, my friend rang them to change correspondence address which the Halifax did with no problem at all so there were no issues of post going to a wrong address.
Clearly my friend's action was wrong...
You are going to struggle to get a BTL mortgage as a first time buyer (it can be done, juast not by many lenders.)
You will not get a BTl mortgage above 90% LTV (and you will struggle above 85% at the mom, esp as you are an FTB.)
I'd say that makes your mind up.... however you are going ot have to be very careful regarding home insurance. If you set up a domestic policy on a rented property and the Insurers find out, you will not have cover. You will then be in a whole world of hurt regarding your insurers, your mortgage conditions and your mortgage company.
You will not get a BTl mortgage above 90% LTV (and you will struggle above 85% at the mom, esp as you are an FTB.)
I'd say that makes your mind up.... however you are going ot have to be very careful regarding home insurance. If you set up a domestic policy on a rented property and the Insurers find out, you will not have cover. You will then be in a whole world of hurt regarding your insurers, your mortgage conditions and your mortgage company.
I admire your courage in plunging into the market with only a 5% deposit, which would be easily wiped out in any reasonable house price fall, leaving you in hock to the bank with no equity. I spent the early 90's litigating on repossessions following that house price fall and will always remember the guy whose house sold for around 1/2 what he paid for it in a sought after area of W. London.
It seems to be common currency to believe that houses are always sound investments and over the long run they are - but if you are stretching yourself to get on the ladder now, why not wait and see what happens in the next year to house prices, sticking the money in Cash ISAs in the meanwhile?
Unless things have changed dramatically, courts avoided giving Banks repossession orders for breaches of the mortgage conditions that didn't involve failure to pay the monthly installments and that included failure to pay life insurance that was a term of the mortgage.
It seems to be common currency to believe that houses are always sound investments and over the long run they are - but if you are stretching yourself to get on the ladder now, why not wait and see what happens in the next year to house prices, sticking the money in Cash ISAs in the meanwhile?
Unless things have changed dramatically, courts avoided giving Banks repossession orders for breaches of the mortgage conditions that didn't involve failure to pay the monthly installments and that included failure to pay life insurance that was a term of the mortgage.
As Scotal says, you are not going to get near a BTL mortgage with only 5% deposit. More like 15%.
So you can gamble and go for a 95% residential one, but you will be telling fibs. A lot do it, but it is a risk. You may also struggle at 95% in this current climate, unless your credit history is good. Oh yes, you will need good accounts to fit, you wont be going self certified (not having to prove income) these days now at 95%.
So you can gamble and go for a 95% residential one, but you will be telling fibs. A lot do it, but it is a risk. You may also struggle at 95% in this current climate, unless your credit history is good. Oh yes, you will need good accounts to fit, you wont be going self certified (not having to prove income) these days now at 95%.
I'd say have a look at ft.com and http://www.housepricecrash.co.uk/ and a few other financial websites and then make your own mind up.
I wouldn't buy my 1st property now. But I said that to friends 3-4 years ago and I was wrong. But IMHO I'd sit and save and you'll get a better deal next winter.
I wouldn't buy my 1st property now. But I said that to friends 3-4 years ago and I was wrong. But IMHO I'd sit and save and you'll get a better deal next winter.
Ordinary Bloke said:
I'd say have a look at ft.com and http://www.housepricecrash.co.uk/ and a few other financial websites and then make your own mind up.
I wouldn't buy my 1st property now. But I said that to friends 3-4 years ago and I was wrong. But IMHO I'd sit and save and you'll get a better deal next winter.
The same housepricecrash that's been going for years. Most of them are self confessed bears that WANT the market to crash....so that they can get on the ladder themselves.I wouldn't buy my 1st property now. But I said that to friends 3-4 years ago and I was wrong. But IMHO I'd sit and save and you'll get a better deal next winter.
All I would say to the OP is to steer clear of 1 or 2 bed new builds if there are hundreds in his town/city. And that the yield is at least 5%.
He'd be beter off buying a house and renting out a room...IMHO.
Ordinary Bloke said:
I'd say have a look at ft.com and http://www.housepricecrash.co.uk/ and a few other financial websites and then make your own mind up.
I wouldn't buy my 1st property now. But I said that to friends 3-4 years ago and I was wrong. But IMHO I'd sit and save and you'll get a better deal next winter.
I would say that that website is about the best example of bias and agenda - even in the title there is!I wouldn't buy my 1st property now. But I said that to friends 3-4 years ago and I was wrong. But IMHO I'd sit and save and you'll get a better deal next winter.
It is no co-incidence that in the front page where there are 36 expert opinions of future housing market trends the website owner's opinion is the largest drop...
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