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First Time Buyer

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  • First Time Buyer


    I'm 25 and I am on the verge of buying my first property. It's a two bed ground floor flat which I eventually want to live in. I have a 2 year tracker at 3.29% which I'm pleased about. I have put down a £30,000 deposit £10,000 of which my parents have borrowed me.

    However, on the estate the property is on I have noticed that many of the flats have been let out all within a few weeks. This has made me think about renting out the flat for a year or two and use the money from the rent to pay my parents back quicker.

    I have spoken to a few agents, all of whom say I can get £425 a month and they all charge 10% fully managed and £375 to advertise.

    Being that I'm new to this I wondered if anyone could offer any advice in terms of what I need to know when letting out a property and whether or not my plan is worth while?


  • #2
    Get a Landlords Insurance Policy if Renting

    If you do decide to rent ensure that you get a let property insurance and also if you can a rent guarantee and legal expenses policy. This will protect you should the tenants decide to stop paying you.


    • #3
      Sounds like a good plan I know several people who have done the same thing. I agree with MarkG get rent guarantee.
      Portugal Property for Sale


      • #4
        If you have the time you could manage yourself and pay your parents back even quicker
        Ryan Forbes
        Quick Property Sale
        Commercial Property Scotland


        • #5
          It sounds like the mortgage you have arranged is a standard residential mortgage whereby the contract with the lender requires you to reside in the property and does not enable the property to be let to tenants.

          If you choose to let the property then officially you ought to request permission from the lender, which they are not obliged to agree to, and if they do they may alter the rate of interest that you are paying.

          If you choose not to notify the lender then you could be in breach of contract should they discover that you are not living in the property.

          In terms of the economics of the situation you haven't said how much you are borrowing, or how much your monthly mortgage payments are, but I would guess that unless you are borrowing less than £100,000 then you would be out of pocket when comparing rent against mortgage anyway.

          You also haven't mentioned what the maintenance / service charges / home insurance costs for the property are. These would have to be taken from the monthly rent before you can calculate your profit unless the letting agents have suggested that you can charge £425 per month + other costs.

          It doesn't sound particularly profitable to me unless your mortgage is very small indeed, and it's unlikely that your mortgage is set up for a rented property.
          Property for sale in Torquay



          • #6
            The above post by IFA does make some good points.

            As for whether it is profitable, I assume it must be or you wouldn't be considering it.

            But as an alternative, would in be worth you considering living in the property yourself and renting a room?
            Independent Mortgage Advisor, expert in residential, buy to let, holiday let, and refinance mortgages


            • #7
              Could i also say be wary of allowing a agent to manage it. I've had terrible experiences with using an estate agent to manage a property where they charged me a fortune but never took references so i was left with an awful tennant who refused to pay rent for 6 months trashed the property and disappeared. It would be much better to get someone you know and trust to help manage it and market it yourself online, if you have the time.


              • #8
                Hello, yes i would definately get a rent guarantee, i think this is a must.