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Buying a house

Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
For the next few years rather than renting at university I'm hoping to buy a house and rent some rooms out to pay all or a substantial part of a mortage, whilst living in it at the same time. Has anyone done the same?

I was just wondering what I needed to look out for and such. I only need to cover the mortgage, the deposit / financial backing is covered, and if need be the mortgage can be in someone elses name. I will mainly be dealing with the day-to-day running of the house, as with property the way it is especially in York (with the university expanding) rent is likely to increase, and hence property prices will as well - so for my 'backer' so to speak :p it will be a good investment, and it will fall to me to make sure all the bills are paid on time as I will be the main occupant.

Any advice???

Comments

  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    How are you going to be able to pay for this mortgage? I know you say that you will rent out some rooms but...

    You are a full time student. You don't have an income.

    I doubt you'll be even able to get a mortgage.
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    Sounds like a good idea to me - if I knew prices would go up as madly as they did back when I was at Uni I'dhave probabaly done the same thing
  • littlemissylittlemissy knit chick Posts: 9,972
    How are you going to be able to pay for this mortgage? I know you say that you will rent out some rooms but...

    You are a full time student. You don't have an income.

    I doubt you'll be even able to get a mortgage.

    Many students do a similar thing. It all depends on what you can agree with a mortgage provider. I knew of a lot of people who did this. They just had their parents as a guarantor just in case.

    The way I see it is that you will have an income - you will be a landlord.

    I'd speak to an Independent Financial Advisor tbh. See what they say about it all.
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    Haha, good luck affording property in York!
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    Haha, good luck affording property in York!
    Haha.

    That crossed my mind too.

    Council tax is really high there too.
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    That is a huge commitment, but there's no harm looking into it. Littlemissy is right, speak to someone who really knows the craic and can give you some objective advice about whether you're in the position to do this and what is the best plan of action if you are.

    We are just getting the ball rolling about buying our flat at the moment and it is utterly, utterly hellish. I have never spent so much time with boring besuited men in my life. I could never have done it while I was at Uni, it would've probably killed me :p
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    Haha, good luck affording property in York!

    its not my money... :p

    my mum has a financial advisor dude who plays with our money (im poor honest) who reckons he can get a mortgage at 4.5% which works out at about £850 pcm on £150k. However, there are other people in play who have basically unlimited funds who want me to see what the market is like in york for investment property hehe. It's not what you know, it's who you know afterall.

    But just wondered if it was actually managable... if I'm in a house with 3 others paying £60 rent per week that works out to cover the mortgage -£70 pcm, and there are also the bills to pay. But seeing as I get a very sizeable student loan, grant and bursary amounting to £6.5k of cash in my bank each year, I think I should be able to cover that.

    It's making sense, and I can see the pros, but more woried about the pitfalls. For example, I'd be liable for the property so if anything bad happened, I'd be in the shit. Also, if someone does a runner, if I cant find tenants and then have an empty house, etc. etc. etc.
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    its not my money... :p

    my mum has a financial advisor dude who plays with our money (im poor honest) who reckons he can get a mortgage at 4.5% which works out at about £850 pcm on £150k. However, there are other people in play who have basically unlimited funds who want me to see what the market is like in york for investment property hehe. It's not what you know, it's who you know afterall.

    But just wondered if it was actually managable... if I'm in a house with 3 others paying £60 rent per week that works out to cover the mortgage -£70 pcm, and there are also the bills to pay. But seeing as I get a very sizeable student loan, grant and bursary amounting to £6.5k of cash in my bank each year, I think I should be able to cover that.

    It's making sense, and I can see the pros, but more woried about the pitfalls. For example, I'd be liable for the property so if anything bad happened, I'd be in the shit. Also, if someone does a runner, if I cant find tenants and then have an empty house, etc. etc. etc.
    This is a bit irrelevent and I'm being rather nosey so tell me to p'off if you want but...

    how on earth can your Mum afford to help you buy a house (deposit will be huge, payments, etc) how are you entitled to the students loan grant?
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    my mum has a financial advisor dude who plays with our money (im poor honest) who reckons he can get a mortgage at 4.5%

    Half a percent below the Bank of England base rate?
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    It's not your money? Who's money is it then? Your mums? Like Stacey said, how on earth have you persuaded the uni and the loans company to give you that amount of money if your mum can afford to help you buy a house?

    Given what you've posted on here in the past, something doesn't add up.

    But, because this is not in any way helpful to the thread, I have done a search on rightmove (my website of choice at the moment) and there is very little that is
    a) <£150k
    b) enough bedrooms for you to make your money back
    c) anywhere near enough to the uni for you to attract tenants.

    Good luck.
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    if I'm in a house with 3 others paying £60 rent per week that works out to cover the mortgage -£70 pcm, and there are also the bills to pay. But seeing as I get a very sizeable student loan, grant and bursary amounting to £6.5k of cash in my bank each year, I think I should be able to cover that.

    Be careful. Houses are fucking expensive things. I would imagine that £6500 a year would disappear VERY quickly, especially if you aren't even covering all of your mortgage with rent. And I imagine that you'll have to live off that too, it's not just a lump sum you can plough into the house. We are living off a joint income of around £35k, and our mortgage is half of what you are looking at, and to be honest it's a struggle. There are loads of things that the house needs but we just can't afford.

    It's all very well having backers, but how generous will they be in the long term? Will you be able to call on them in the future when you find yourself unexpectedly £100s in debt to electricians or gas men or Comet (when your fridge and washing machine decide to die in the same week, as they love to do). Don't underestimate the cost of maintaining a 4 bed house.

    Also think about what will happen in the summer when students want to go home. You could find yourself with an empty house for at least 3 months of the year, and they won't be wanting to pay full rent if they're not occupying their rooms. But you'll still be having to cough up the same every month.

    To be honest I agree with the independent advice idea. Not the guy who deals with your mum's money, but someone totally objective. Get all your figures sorted and see if you're being realistic or not.
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    Why you all annoyed at me? :confused:

    I'm just going on what I've been told. I'm just looking into it. Everyone's getting so bloody hostile so bloody quickly. Yes, crocidolite, it's not a usual rate, but it is attainable. I don't know how.

    Who's money is it? I'm not sure why that matters. Why do I get full loan and grant entitlement from the student loans company? Because my household / family income is below the relevant thresholds.

    I don't know why some people seem to have a bone to pick, it was a genuine question, is buying a house and renting rooms out and then selling it after I've finished uni a viable option, have people done it before?

    If I was that ultra rich and conning the system do you think that I'd be paying the mortgage?

    I've just done a very brief search (typed in postcode: YO10) and found plenty. If I start to look into it more seriously, I'd go to the estate agents and get more information.

    The gist of the plan is:

    get mortgage on house - initial deposit required. That 'mortgage' is fixed. Live in it, and cover the repayments and bills for a few years. Then sell it. With the state of the housing market in York, it seems that house prices will have increased by then. So whoever covered the deposit gets a bit of profit. I get somewhere to stay.

    I appreciate some people may just be curious, but I feel like I'm undergoing the spanish inquisition, all these questions about my personal situation, which I'm not sure are relevent because the information I've already given seems sufficient.

    Kaff: thats what I was thinking about for the summer months... however one of the people who would potentially like a 'project' is just a property investor, and I think from his point of view he'd be happy to buy it and sell it on making money without the rent. But I thought it would work better if they covered the 'investment' and I covered the mortgage side.

    I might have a looky at the independent advice thing. Will have to look into it :thumb: cheers. I'm not worried about the limits of generosity of my backers so to speak, more do not want to impose. I think partly they're trying to do me a favour.
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    shyboy i don't think people mean to be hostile, more interested in your ambitious plan. Asking such questions only helps to give you advice and im sure they have your best interests at heart.

    on the subject i know peoples parents who have bought a house for students to rent, never the actual student. Aside from financial difficulties, would you want the extra stress to get in the way of your studies. Getting what could potentialy be your friends to keep paying up rent is not an easy task
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    If you were renting out rooms, wouldn't that count as income which would affect your student loan?
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    Why you all annoyed at me? :confused:


    I think it's a good idea in principle. I've been renting for years and it is in some senses a waste of money. But you need to be careful, it's a huge commitment. I tend to think student years should be somewhat carefree and you should be able to have your summers free to travel/work away. If you have a mortgage to pay that won't be possible.

    Also, I'm hesitant to say, but people probably don't like the idea of a student getting lots of financial help from taxpayers, going to make them a profit and buying a house. But then it is your money and what's the difference between using the money like that and just drinking it away?
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    It wouldn't be 'my' house per se, I would just be living in it I think. Sorry if I was grouchy last night, got a bit on the defensive. Yea, I know what you mean pussykatty, possibly later in the year if I find a group of friends and we want to houseshare then it would be a more viable option to buy rather than rent. As for my student loan, I would agree I probably get more than I need, but that's the new system. I have no dependents, just no income from my family whatsoever, which means I get the maximum amount. But I have friends who's family income is higher, but who also spend more money, but because it's based solely on income they will get less than me. We practically own our own home so don't have however much going out for the mortgage each month, have one car and shop at Aldi :p so our costs are pretty low, which means we can live comfortably on a low income.

    The house was going to be a seperate 'project' where basically my mum or someone else would be the owner and landlord, but I would be living there and collecting rent, I thought it would be more convenient if I acted as the 'go-to guy', rather than having a landlord only accessible by phone. There were never any set in stone things about it, we were discussing it in the summer that if a good opportunity for investment came up then I should go for it and they'd put the money in, then after I've finished uni we'll sell it and split the profit. Whereas from this perspective it seems easy enough to pull off, I was concerned about the extra stress and stuff. I mean, what am I going to do in the summer? I'm hoping to start up my own business whilst I'm at uni :blush: (but we don't need to talk about that lol) as even though I'm doing my degree I really would dislike to work for someone else.

    If I'm being mr. landlord too it might be too much. But speaking to some of my friends on campus (3rd years and graduates) I said 'do you think it's worth buying a house, if I had the money?' and they said there's no better time as rent is only going to go up.

    So it's just a balancing act of the pros v cons. My mum has been wanting to get into property for a long time, and is willing to take out a mortgage for one but due to our low income it would need to be paid through the rental income.

    I'm just worried about my part, whether it's manageable or not. :chin: If worst comes to worst I can just get my current flatmates to come with me :p who are all on 52 week leases from the uni. (nurses!)

    But yea, just an idea. :)

    p.s. for those who are still nosy, the guy with all the money is an extremely successful businessman who was talking to me and my mum about this
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    Ah, so it's not actually you who is buying a house. Someone else is buying the house, you are just managing the property. I see.

    I think you should try to follow the same route the uni is doing, and get some foreign students to live in your house because you can exploit them really well and make a fortune :thumb:
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    in leeds we all had to pay a years rent even though we wouldn't be there between july and september. bastards :p so if its the same in york it shouldn't be a problem covering the summer rents.


    unless you are buying a house that is ready to move in then you will have to redecorate, renovate, make sure you have the correct appliances and safety regulations.. theres a lot to consider! for instance you have to have a certain number of sinks/toilets per number of people.
    i think you need a lot of support because you are young and to also have some meetings with other students who have done the same thing. they will be able to give you advice. or leave it until you have lived in a shared house for a year because you will learn a lot.
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    Good points Lipsy. Our landlady hadn't done a right lot and so has had to buy us a new freezer and have new parts for the grill bought and fitted, among other smaller things.

    We have to pay for 12 months as well, so she has income from us until the end of September.
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    How long do you plan to be at the uni?

    I find it a bit strange that if you will not be there for long that you will sell the house so soon. Buying and renting out property can be a lucrative business but if you are not getting enough rent in to pay for the mortage each month and have to cough that up yourself you are not the one who will be making a good deal out of this. Especially if you will end up losing out on three months per year that you will have to pay the full monthly installment on yourself.
    I would also think that it became more profitable when you moved out, especially if you are certain that rent will go up.

    My friend at uni and her boyfriend have considered buying a house near the biggest uni in Iceland and had planned that the rent income would be higher than mortage. That was their basic principle they started out with. However, the bank really didn't like the fact they have no income so they got chucked out for now. ;)

    Personally, I would not take on this kind of responsibility unless I was profiting from it. You seem to be ready to throw your student loans at it. Consider how much you might get if you work part time with your degree. More? Less? Similar?

    You always take on some risk when investing, but like you've laid it out I have my reservations about this.
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    Who's money is it? I'm not sure why that matters. Why do I get full loan and grant entitlement from the student loans company? Because my household / family income is below the relevant thresholds.
    I was just curious.

    My household income is below the relevant threshold so I'm only entitled to the full loan and grant. Not the bursary (which is why I cannot now understand why you whinge you are poor as I get £1.5k less than you and manage fine :p and yes, I don't get any help off my parents)

    The reason why I'm curious is I cannot understand how your Mum can afford to buy a house if her income is so low. I know that my Dad couldn't (I live with my Dad alone).

    The whole reason of being entitled to the full grant and loan is because your parents cannot help you but if she can help you buy a house...well, you can understand why people are getting annoyed.

    Also, on the loans application form, I'm sure that they asked about any savings. I'm sure that if you have savings over "x amount" you are not entitled to the full loan and grant. I'm guessing your Mum must have alot of savings in order to be able to fork out money for a deposit.

    I'm not having a go. I'm just curious.
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    We have equity in our home which my mum is looking to release possibly, if it looks like a good investment.

    The bursary is from the university, york does it based on your income, and if you receive the full maintenence grant and loan you're also entitled to the bursary. I had to apply seperately to the university itself.
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    lipsy wrote:
    in leeds we all had to pay a years rent even though we wouldn't be there between july and september. bastards :p so if its the same in york it shouldn't be a problem covering the summer rents.

    Yikes. In my Leeds and Wakey student houses we only paid half rent in the summer.

    Well, if the norm now is fleecing your tenants for the full whack, my point isn't applicable.
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    .
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    You can earn up to about £4000 tax free from renting out rooms in your house, you dont even have to declare it on your tax form (I dont think).
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    AFAIK you can only offset rental payments received against mortgage outgoings, so fi you're making a profit you do need to declare all of it. If the house is not a first house you would also be liable for Capital Gains Tax on any property price increase.

    Also if you rent out rooms you do need to declare it to your mortgage provider- if you don't it is a breach of your mortgage and the lender can demand full and immediate repayment if they find out.

    If your mum and her IFA think its a good idea for her then that's an issue for her and him, but I wouldn't be taking on any financial commitment if I were you. If the plan is just to get you somewhere then go for a smaller property, one that you can afford by yourself. as kaff says, houses cost a lot of money, and few people realise how much until they own one. We have two professional wages coming into our house and we've still had to wait eleven months to be able to buy a new fireplace.
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    not sure if this is relevent or not but my first year in halls i lived with a guy who through inheritence owned a house completely outright which he rented out. he was unable to get a mortgage as he was a student despite the fact he was already a property owner. plus in terms of finding new tennants if they move out and general maintainance of the house, repairs etc its still an expensive business as well as a time consuming and stressful one.
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