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London FTB thinking of buy to let


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Hi All, so basically I want to own a property in London or close to it. Wishful thinking I know! For the sake of this post just assume it has to be London. (Of course I know if I leave London I have a lot more options but I have an entire life and community here.)

I earn £30000 a year which is of course nothing in London. But I have a deposit of around £75k.

I can't get approved for any residential mortgages because of the multiplier effect, which is why I am looking at non-traditional routes. I saw a flat for 300K. I can get a 25 year BTL mortgage ranging from 230-265k if I add on my mums salary of around 25k. (Barclays calculator says it would be approved).

So from what I can tell the banks would approve me. When I looked at the mortgage payments I was seeing around 1200p/m. Rents in the area are around 1300p/m. It is clear that with maintenance etc I will not be making a profit. But for me it is about getting my name on the ladder in London. I want to eventually move into the property or sell it and get something else in London. I'm not even close to actually doing this, just wanted to know everyone's opinions. Do you have a better suggestion? Shared ownership? I don't know? HELP! And again, keep to London/Greater London or just outside it only.

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Hi @lallu - thanks for sharing your story and welcome to the forum! Glad to have you here :)

I think it's good that you recognise how expensive it'll be to get yourself on the property ladder in London. Goes without saying that you'll be looking at much higher costs in the capital than you would be if you invested your deposit elsewhere.

If you're okay with not making a profit on this £300k flat then I think it's worth considering pursuing it in the way that you've mentioned. But have you considered any other strategies? I'd give this video a watch to see if any of the other options appeal to you.

 

Mark Rocks
Community Builder and Content Writer

www.propertyhub.net

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  • 1 month later...

Hi @lallu

You may have to consider different areas of London or maybe even delaying the purchase?

Have you considered what it would take to get a pay rise and or promotions to help with the mortgage application? Maybe speaking with your employer and highlighting it is affecting your mortgage application might help in defining a clear career path for you (and help with a timeline).

Are there any side hustles you can start, to improve the deposit?

Reviewing your outgoings and cutting anything that isn't a priority or helping to get to your goal of a property? Depending on your circumstances, maybe moving into a flat share (or  cheaper flat share if you are already in one).

Alternatively, what if you continued to rent in London but bought a more affordable BTL in another area (without relying on your mum's salary - not personally sure on the legal issues of that) - it could generate extra cash flow for you whilst retaining the London lifestyle. When you eventually come to buy a place of your own, hopefully it has gone up in value, or even better if you can keep it and still buy. You do lose you first time buyer status though for LISA and Stamp Duty purposes though so need to consider this carefully.

There are some good videos on YouTube, highlighting the pros and cons on this.

 

Good luck and I would be interested to find out what you decide to do.

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