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Investing with just 15K (sigh)


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Hello PH,

I'm a very new member here after keeping busy learning online and reading 'successful property letting' by David Lawrenson - a really good book to get me through unemployment thanks to covid.

At the moment, my thoughts surround buying a 2-bedroom terrace house 0.5 miles from Luton Station, with a view to renting out on separate tenancy agreements to get 2 x £450 pcm.

I haven't spoken to any mortgager advisors as things stand but I've hypothetically looked at a £500 per month mortgage as the worst case scenario on a 40 year payback to keep the payments each month as low as possible - so potentially £400 profit a month.

I don't currently own a property (I'm 27 and rent down in East London, close to work) and still have my first time buyers government bonus I could use. I recognise that a BTL mortgage requires a higher deposit, so I intend on getting a residential mortgage with a view to changing to BTL when possible.

At the moment I have 12K saved with an additional 3K government bonus to come. The houses I've seen within my strategy on rightmove and zoopla are around a 180K-200K asking price, so let's say that I manage to secure a £150K true value property with a 5% deposit of £7,500 - I could potentially have £7,500 (15K saved minus 7.5K deposit) to handle the rest of the start up fees, redecorating, furniture, admin, solicitors etc.

Luton itself I feel may be an area that's due a growth boom - being so easily reachable from London, direct to Kings-cross station and just off the M1. There's also the university of Bedfordshire and a lot of redevelopment planned for the area, along with the expanding London-Luton airport. Nearby areas such as Stevenage, Milton Keynes and Hatfield have all received their growth injection, so I'm hoping it's a matter of time until Luton gets there too. It's definitely one of the only remaining big towns in the south east where housing is relatively cheap.

Really, I'm just trying to be savvy and get myself on the right path to financial flexibility whilst I'm still pretty young. Ideally this would serve as a nice consistent second income through renting and hopefully the house value will rise steadily too..

Hopefully the 15K pot isn't laughable to you guys! Thoughts welcome.


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  • 1 month later...


It sounds like you want to rent the property buy the room, so would be considered an HMO as a BTL mortgage would only allow a single AST.  As a first time landlord you will find it very hard to get a HMO mortgage as they want experience.  Onto mortgages, the best you will get on a BTL is 75%, but not being a home owner this maybe difficult in these times as loads of mortgage products have been pulled.

You mention about going buying as a residential and then letting it.  Some  mortgage companies will allow this, but not straight away.  You also have the issue of not  having a job, so you will not pass the affordability test for a resi mortgage.

Sorry to be the negative, but it sounds like you may have a battle on your hands in the current climate.


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Have you thought about living in the property you buy and renting the other room out? Are you flexible to move or tied to east London? If you could live in Luton, even short term, you could get up and running and save the rent you would have paid out? Might be a non starter but maybe worth considering if not. As per  James' reply I think it is going to be very tough for you in the current climate but good luck, there is usually a way!

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