UK Landlord Forum / Life

hi guys. I wonder if anybody has any pearls of wisdom for me concerning the following situation:

Lucky girl that I am, my father is willing to help me out buying a flat (he will provide the deposit and money towards the mortgage repayments for a year). I currently rent with a partner in Central East London, an area where I would like to stay for the immediate future due to work, friends and family. My budget is up to £200,000  which means I cannot afford a flat large enough for the both of us in the area I want to live in. I feel like the ideal solution is to buy a one bed flat a little further out of EC London (towards E9 or E5 in Hackney- an area where you get a  bit more for your money at the moment and where I believe prices will rise in the next few years due to urban regeneration projects and the Olympics) and rent it out to tenants while I continue to rent a two bed flat in my current area.

This would get me a foot on the property ladder and a nice investment but without having to move to a different area and kick my boyfriend out.

I was hoping if you could confirm that this is a workable plan and also whether there are some pitfalls and problems that I don't know about? i.e. prohibitive legal or buy-to-let costs?

thanks xxxx

I would like to be able to offer some kind of advice in return but I know very little about property. If anyone needs any advice about child psychology or the Isle of Wight (my two specialist subjects....) then please get in touch!

Jen, I like the way you're offering child psychology advice in return for property investment advice. Two issues so unrelated that it made me smirk

Welcome to the forums, by the way.

I was in Hackney last week, and the area has improved drastically!! There are a lot of trendy bars around there, and plenty are in development; it's a hot location for students right now. I definitely think Hackney is a great choice, especially since it's so close to Liverpool Street Station. Prices should definitely rise in that area.

I'm going to talk about mortgages a little, and I guess someone else can join in, or give you advice in another area e.g conveyancing.

I would recommend getting a 2-year (at least) fixed rate mortgage, simply because i don't think interest rates will drop anytime soon. And whatever you do, don't get a mortgage through an in-house estate agency mortgage broker. They will often give you the worst deals possible. You should speak to a few independent mortgage brokers to get the best possible deal.

I think where most people mess up when buying property is when they choose their mortgage. A lot of people can't be bothered with doing the research, so opt for the easy options e.g go with an in-house estate agency broker.

Things to ask when choosing a mortgage:
1: are there any penalties for overpaying your monthly payments or paying everything off earlier than the mortgage policy?
2: how long are you tied into the mortgage policy for? When are you allowed to remortgage without being penalised?
3: how much will the setup cost be with the lender?
4: does your mortgage broker have a fee? Mortgage brokers shouldn't charge you anything, as they get their on commission from the mortgage lender. So stay clear of the greedy brokers that expect you to pay a fee.

I hope I've been of some help. Any further questions, please don't hesitate to ask.

Brilliant, thank you, Propertyfag. I didn't know any of that so you were a real help!

I'd be interested to know if anyone has any advice about buying specifically to let?

jen xx

Ok, well I think the main issue you need to think about is location and your target audience. Those two factors should be strictly related.

First you need to decide who your target audience is, and then you can choose your location.

Are you looking to rent out to students, young professionals, families...etc? You should always target a specific audience, otherwise it could take longer to rent your property out, which will essentially cost you more money.

Say for example you want to rent out to students, then a flat in Hackney would be ideal. But if you're looking for a full-time working family to move into your property, then the chances of accommodating your flat in Hackney are unlikely.

Are you fussed about who lives in your property, or do you just want it rented out asap?

I'm not particularly fussed but, as I think you are right, I'll probably aim for letting it out to students (or similar).

Do you think I ought to be thinking about a buy-to-let mortgage  or as I'm also a FTB might a regular mortgage be the way forward?

A LOT of landlords get regular mortgages and let their properties out because rates are generally lower. However, it's not strictly legit. If your mortgage lender finds out you're letting your property out and you haven't declared it, their could be implications.

Having said that, it's unlikely you'll get caught. But, I guess it's a peace of mind issue. You might be one of those people that will sit there thinking, "damn, what if I get caught..."

Technically if your mortgage conditions say that you can't rent it out without prior consent and you do, then you are in breach of your mortgage deed and they could repossess. It's extremely unlikely though.

I guess it's just safe to declare to your mortgage lender if you're going to let your property.

I did a bit of research and put this article up, i hope it helps

http://www.propertyinvestmentproject.co.uk/blog/2007/08/15/letting-property-without-a-buy-to-let-mortgage/

you, propertyfag, are wonderful. thank you xxx

p.s. I have now hit a new flaw whether my dad thinks it will be too much trouble being a landlady whilst doing my doctorate. I'm hoping to persuade him otherwise.

Quote from: jenjen on August 16, 2007, 10:23:17 AM
you, propertyfag, are wonderful. thank you xxx

p.s. I have now hit a new flaw whether my dad thinks it will be too much trouble being a landlady whilst doing my doctorate. I'm hoping to persuade him otherwise.

Praise the lord and all that, the site does work after all lol.

pfag is our leader

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sorry dont mind me

Quote from: jenjen on August 16, 2007, 10:23:17 AM
you, propertyfag, are wonderful. thank you xxx

p.s. I have now hit a new flaw whether my dad thinks it will be too much trouble being a landlady whilst doing my doctorate. I'm hoping to persuade him otherwise.

No worries

Tell your dad you're a modern woman- independent, strong, determined and all that jazz!

Quote from: propertyfag on August 14, 2007, 02:36:25 PMAnd whatever you do, don't get a mortgage through an in-house estate agency mortgage broker. They will often give you the worst deals possible. You should speak to a few independent mortgage brokers to get the best possible deal.

I noticed that when I bought my place; spoke to two supposedly independent mortgage advisors who were associated with local estate agents, and in the end I got the best deal I could find (with only limited research due to time constraints/travelling through work at the time) with my own bank who I'd been with for eight years.

Why do they do that? Its an opportunity to make a few bob and they blow it recommending clearly unsuitable products? Do they get paid anyway? Seems to me that even if they do, its still an opportunity lost to make some quids, from their point of view.

V

Hey V,

The agent might get some form of commission on every successful applicant he sends towards the broker. Any broker associated with an estate agent is unlikely to offer you great deals. It's the private brokers that get the best deals.

But yeah, some times the best deals are right under our noses- like you said, you found your bank to offer you a great deal. It's always good to see what your bank has to offer.

Yes in house is always a money maker, dont forget people that independant advisers also make there money through insurances as well, this is also the case with the spotty hurbert inhouse guys.  They be after your money any way they can.
I have a wounderfull lady  adviser who will and has bent over backwards for me many times, not just to show me her crab pose, but to also take all the stress out of funding projects for me.  My advice find one of these, you can usualy tell if they are any good as soon as you see um, and to be honest you dont mind paying them a little extra as the job they do for you is a good un.


Best wishes people

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