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The Myth About First-time Buyers
If you have yet to get on the property ladder, you may be forgiven for thinking you will have to wait until middle-aged before a lender will seriously consider your mortgage application at a sensible Loan-to-Value and lending rate.
Far too many pundits would have younger persons believe they can't afford the deposit or mortgage repayments and, when only thinking about residential property to-live-in, they may have a point.
But, they do not talk-up the opportunity any wage earner has to obtain a commercial or Buy-to-Let mortgage to purchase that first property.
You see, applicants for commercial mortgages in general and BTL in particular are considered using different rules than for residential mortgages and anyone may be considered for a commercial mortgage.
For a start, rental income is taken into account within the loan calculation for a BTL mortgage. Yes, you will require single or combined annual income of at least £25,000 too however, a large number of working people exceed this level of earnings.
Also, when you consider buying a property at Below Market Value (BMV) purchase price, a whole new world of opportunity opens up before you.
But, you may be saying, I won't be allowed to live in a BTL mortgaged property, so I am still having to rent?
Quite right, but how would you like to own a property that your tenant is paying for?
Also, once you are on the property ladder, including one that is let, you are no-longer a First-time Buyer and lenders will appreciate the clean credit history you are building for future.
Here's the math ...
Residential Mortgage on a 2/3-bed house of £166,000 Open Market Value £166,000 Purchase Price £1,660 Stamp Duty Land Tax (1% of purchase price when over £125,000) £41,500 Deposit Required at 75%LTV £124,500 Mortgage Loan at 3% I.O. Residential Rate £41,500 Annual Income Required (lender multiple formula x3 to support £124,500 loan) £311 pcm Mortgage Payment to Lender
Commercial/BTL Mortgage on same 2/3-bed house of £166,000 Open Market Value £125,000 Purchase Price (saving 25% through our website) £Zero Stamp Duty Land Tax (purchase price under £125,000) £31,250 Deposit Required at 75%LTV £93,750 Mortgage Loan at 4% I.O. Commercial Rate £25,000 Annual Income Required (no multiple calculation required as *rent is used) £312 pcm Mortgage Payment to Lender BUT £500 pcm *Rental Income (will support loan well in excess of the amount you require) WITH £188 pcm Excess Rental Income (before operating costs)
10 PLUS POINTS ...
1. you own a property 2. you saved c.25% of its open market value 3. you saved the Stamp Duty 4. you enjoy day one equity equal to 33% of the purchase price 5. you borrowed less money 6. you required a lower deposit 7. you are no longer a first time buyer 8. you have commenced a mortgage credit history 9. you are receiving excess rent every month 10. you have your tenant contributing to your rental commitments on the property you are renting/lving-in, and
... you can remortgage after 26-wks using open market value plus any capital growth, adding another BTL to start your very own property portfolio.
Summary ~ the pundits say FTB's will be at least 44-years old before you can get on the property ladder. We say, anyone over 18-years of age, earning £25,000pa could prove them wrong!
Call John on 0203 239 4359.
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