First Time Buy to Let for 18yr old

by Readers Question

11:58 AM, 16th January 2015
About 4 years ago

First Time Buy to Let for 18yr old

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First Time Buy to Let for 18yr old

I am new so apologies if I make all sorts of mistakes and ask seemingly daft questions. My daughter is 18 and has just inherited a small amount of money which she wishes to invest into a rental property.

Her Dad (my ex) was a property developer who was quite successful, he started with nothing and had built a portfolio of about 14 rentals by the time he died suddenly in 2002 at the age of 43 intestate. This was terrible as you can guess.

The ensuing 5 yr fight and legal fees meant that his wish for his many children to receive enough money to be able to buy their own £100k house each never happened. However, daughter does have enough for a decent deposit. Ever since daughter was old enough to read and understand the title Property Developer on her Birth Cert. she has wanted to follow in his footsteps so you can understand how important it is to her.

I have the experience of managing rental properties and the time, I am now a housewife of 57. I am a joint homeowner with my husband who is 65 still working and hates taking risks. Our mortgage is nearly finished. I have previously (20yrs ago) been a landlord myself and a mortgage payer although I would have to apply for records of payments etc., I presume this would be possible but would it be helpful? I appreciate mortgage criteria has changed.

My question is: Will it be possible for my daughter to obtain a Buy to Let mortgage?, if so could I , should I be on the mortgage?

Any pointers would be great

Thanks Nikkieighteen



Comments

Stephen Pears - Mortgage Consultant HD Consultants

12:44 PM, 16th January 2015
About 4 years ago

Hi Nikki

There are a limited number of lenders that may consider an application from an 18 year first time buyer/ investor but any application would be based on an affordability model similar to a regulated residential purchase meaning your daughter would need an income from a legal source, employment/ Trust Fund etc.

Also any lender would carry out a Credit Search and I fear this may actually be the biggest stumbling block to an application

However if you were agreeable to becoming a joint mortgagee the number of lender options would increase although you would still be required to meet the lenders criteria which I cannot comment on using the limited information currently available.

Stephen
HD Consultants

Stephen Pears - Mortgage Consultant HD Consultants

12:54 PM, 16th January 2015
About 4 years ago

There are a limited number of lenders that may consider an application from an 18 year first time buyer/ investor although any application would be based on an affordability assessment similar to a regulated residential mortgage so your daughter would need to be in receipt of legal income - employment/ Trust Fund etc

The lender would also carry out a Credit Search and I actually feel this may be a bigger stumbling block.

However should you do decide to be a joint mortgagee the number of lenders that would consider an application increases. You would need to meet the lenders criteria which I cannot comment on using the limited information provided.

Stephen
HD Consultants

Nikki Hughes

14:30 PM, 16th January 2015
About 4 years ago

Reply to the comment left by "Stephen Pears - Mortgage Consultant HD Consultants" at "16/01/2015 - 12:54":

Thank you Stephen, do you think I would be considered now that I do not work? My husband does but I doubt he would want to be on another mortgage at his time of life, although he supports all three of us and intends to carry on working until daughter finishes Uni.

Neil Woodhead

15:02 PM, 16th January 2015
About 4 years ago

Stephen Just out of interest can you be a joint mortgagee without being on the title deeds as owner?

Stephen Pears - Mortgage Consultant HD Consultants

15:17 PM, 16th January 2015
About 4 years ago

Reply to the comment left by "Nikki Hughes" at "16/01/2015 - 14:30":

There is a slim chance you may be considered even though you are no longer working but that would depend on the location of the property as the lenders that could provide a mortgage are regional Building Society's

Is your daughter in employment? Could you not persuade your husband to take a risk?

Stephen Pears - Mortgage Consultant HD Consultants

15:18 PM, 16th January 2015
About 4 years ago

Reply to the comment left by "Neil Woodhead" at "16/01/2015 - 15:02":

Hi Neil

If it is a joint mortgage the Title Deed must be registered at Land Registry in joint names.

Ian Pye

17:10 PM, 16th January 2015
About 4 years ago

Nikki, I bought a BTL property with my 18 yr old daughter just before she started university in Sept 2013.I am retired and am 65 yrs old.My daughter owns 90% , I own 10%.
She used money I had saved for university fees, as deposit. We have a joint BTL mortgage for 10 yrs (until I reach 75).After 1 yr we remortgaged to a different lender to get a better deal.
Both mortgage applications, through our broker, were straightforward and no different than mortgages I have obtained with my wife.
In your daughter's case ,if your daughter and your husband bought the property and had a joint mortgage, it should not be a problem .
Incidentally I got the idea from a thread on this website in 2013.
My daughter intends to make this property her primary residence , sometime in the future, as she gradually buys my stake.

Mike McDonagh

17:23 PM, 16th January 2015
About 4 years ago

I would never suggest bending or breaking rules but it never hurts to play "let's pretend" occasionally.
I am assuming that your daughter lives at home or at least does not already have a mortgage. If I am wrong please disregard the rest of this post.
Instead of buying a BTL lets suppose your daughter decides to buy a property in which to live on a first time buyers residential mortgage. Then lets suppose she decided she couldn't bear to leave home and had to rent out the property to cover the mortgage payments. At some point if she continued to rent she would be well advised to notify the lender who, as long as all mortgage payments were up to date, would most probably charge a small fee to make a small granting permission to let. A little further down the road, when the mortgage tie in expired she might, with a proven history, want to re-mortgage on to a buy to let. And everyone lived happily ever after.
Of course this is only "lets pretend" but I always was a sucker for nice stories with happy endings.

Nikki Hughes

17:41 PM, 16th January 2015
About 4 years ago

Goodness, what interesting comments I have to digest, thank you everyone for replying. I am so glad I joined up - only this morning. I was sure that I couldn't be the only parent trying to help their offspring with such a project. The power of the internet!
I will report back and let you know if we have made progress, in the mean time please keep commenting, Thanks so much

John Constant

14:42 PM, 17th January 2015
About 4 years ago

Hello Nikki,
I am an adviser with HD Consultants, who work closely with Property118 on mortgage matters. I am also a work colleague of Stephen Pears.

You mention that your daughter is at Uni. You, and she, may wish to consider the Buy for Uni mortgage. There are a couple of lenders who offer this, and basically, it enables a student to buy a property within 10 miles of the university that they are studying at, to live in it, and to rent rooms to other students or members of the general public.

Your daughter could buy it on her own, or in conjunction with yourself. In time (as her course finishes), she can convert the mortgage into a standard residential mortgage, or simply sell the property. The mortgage is based on a BTL scenario, ie the rental income secures the size of the mortgage, and it is not based on your daughters personal income.

If you wish to find out more, please contact my colleague Stephen, through his profile, who will be able to tell you more.

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