Can I get a mortgage with savings but no job?(10 Posts)
Long story, but I've found myself out of work at 52 and after some time trying, looking unlike to get back into work that I would enjoy and thinking that this could be an opportunity for a change...
Thinking either property development to do up and sell onwards or maybe a couple of properties a year or do up and let out.
I don't understand mortages especially in relation to BTL - I've only ever had standard repayment mortgages which I've paid off.
Over the years, I've owned/lived in 5 flats/houses and always made a profit when selling. But a lot of that is probably just the rising market and obviously it's different when you're gambling everything on it...
I own a house outright which is worth about £250k ish and have about £70k in available savings and maybe another £50k I could borrow off my mum - interest free.
I wouldn't want to sell my existing house but I have no income at all and I'm living very frugally out of my savings.
I live near Canterbury. I think I could get a small terrace for about £200k ish or a flat for maybe £150k.
I could do them up to sell on or maybe let out.
I don't really know/understand how I would make progress after doing the first property... if I spent £150k on a flat and let it out for say £700 per month... how do I use that asset to get another flat?
I know people do this with re-mortgaging and stuff but it seems so complex.
Obviously I need to Google a lot and do more research but I'd appreciate any thoughts from others - is this just a mad dream or is it possible?
assuming those figures are realistic for Canterbury - your first stop would probably be a mortgage broker to see if it would actually fly. Remember all tax breaks on BTL mortgages are gone or going.
you also need to factor the other costs - maintenance, insurance, agent fees, voids, etc etc
re insurance - not just buildings, contents, malicious damage, home emergency etc etc but also legal and rent guarantee. The worst but possible case is that a tenant moves in, then the rent stops and the destruction and dealing start. You then have no rent, legal costs and a long wait to get possession. Meantime that mortgage still needs to be paid.
Its very unlikely, how would you pay the mortgage when the property was up for sale, or vacant if it was let? I really don't think any mortgage company would go for this.
Don't do it in Canterbury to start with! Pick a cheaper area you can easily get to and do it there. So, go on rightmove, put in within 25? 30? Miles; however far you're willing to travel and see what you can find.
I've been Googling incessantly and there are mortgage companies offering to lend for either the BTL or property development scenario I described.
So, technically at least, it's possible, I'm not suggesting anything unheard of.
Canterbury is good for me because of the relatively cheap property, closeness to my home, and constant turnover of students - two universities - and young couples looking for homes.
It would be much cheaper in Margate for example but less safe as an investment and further away.
Any more tips from experienced folks would be invaluable
Don't forget there is now a 3% additional stamp duty charge on second homes - including rental properties.
As I understand it you cannot now claim tax relief on interest paid, repairs and other costs.
Don't forget if the mortgage company takes a charge on your home and things go wrong you could lose you home.
Yes I was going to make that point user- they will want your home as security if you have no income. The best way to do this is start with a cheap property (normally at auction- look for flats that need leases extending and anything else not mortgageable but that won't fall down!), buy it and renovate it with your 120 k then sell it for a profit. Think you have to wait at least 6 months to sell, otherwise buyers won't be able to get a mortgage. Keep buying slightly more expensive properties, then eventually when you have enough capital you can start remortgaging some of your properties to release say 60% and keep it as a btl too.
Have a watch of the recent channel 5 property developers prog btw. There is definitely still money in it I was quite surprised
"As I understand it you cannot now claim tax relief on interest paid, repairs and other costs. "
Not quite right. You can claim tax relief on the full cost of repairs, and you get a tax reduction on the interest which, if you're a 20% taxpayer, means you stay in the same position as you are now in (though if you're close to the 40% tax band, the total income (not profit) from rental may push you into the 40% band)
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