First Time Buyer / Buy to Let

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poolboybaz

Guest
I am looking to get on the property ladder. Currently, I live in Leixlip, sharing a house with my two brothers, which we rent from my Father.
Ideally, I would like to buy to let, as my rent is quite reasonable (60 euro p/w). My trouble is the lending institutions I have been in contact with have informed me that they do not supply first time buyers with Buy to let mortgages. I wonder what is the reason for this, is there any way around this, or would I be better living in my first property (not my preferred choice........
 
poolboybaz said:
I am looking to get on the property ladder. Currently, I live in Leixlip, sharing a house with my two brothers, which we rent from my Father.
Ideally, I would like to buy to let, as my rent is quite reasonable (60 euro p/w). My trouble is the lending institutions I have been in contact with have informed me that they do not supply first time buyers with Buy to let mortgages. I wonder what is the reason for this, is there any way around this, or would I be better living in my first property (not my preferred choice........
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Just a thought...
Have you considered buying a property, live in it, and use the rent-a-room scheme (up to €635 pm tax free)? It may be more tax efficient doing it that way than buying your first property to rent.

Also, why telling the lending institutions that the property is Buy-to-Let?
May be you could get a standard mortgage (stating your intention to live in say property), and few weeks/months after closing, you move back with your brothers and rent the property (be aware of tax implication though).
I do not know if it is legal or not, but i have seen post from people who have bought a place to live, and 6 months later, decided to rent it for whatever reason... Who knows what they will be doing in 6 months time?
 
The maximum advance for FTBers looking to buy an investment property is 85% and you're right - lenders don't like doing it. Plus you will lose your FTB status in respect of Stamp Duty and tax relief and you may have a CGT liability when you sell it.

Bacchus - if you buy a property to live in and then wish to let it you need the written permission of the lender (in the mortgage conditions) plus all the above re tax relief, CGT and possible Stamp Duty will apply. Not particularly sound advice I'm afraid.

Sarah

www.rea.ie
 
Many thanks for the replies
I am going to have a good look at the room to rent scheme
Wondering would this scheme affect my eligibility for tax relief on my repayments?
 
Just to clarify (since you originally couched this as a property investment/buy to let question) - the rent a room scheme is only available to owner occupiers. This scheme has no tax implications (income tax, owner occupier mortgage interest tax relief, stamp duty [clawback], CGT etc.) as long as the relevant conditions are met (in particular you are an owner occupier and collect no more than €7,620 p.a. in rent).
 
Sorry if I came accross as confused ClubMan.
I realise that the scheme is only available for owner occupiers.
But I would consider becoming an owner occupier and renting a room out, but this would not be my first choice, although something to think about and investigate. many thanks
 
do what i did,i bought my house and when ready it will be rented out.you don't have to tell anyone what your intentions are with the house when applying for the loan.if they do ask say its for yourself to live in.get your loan first!
 
X-Man said:
you don't have to tell anyone what your intentions are with the house
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You do have to tell Revenue if you buy as an owner occupier but actually rent the property out. If you are implying that somebody should engage in tax evasion then please don't. It's really bad advice apart from being dishonest.
 
Thanks X-Man,
From what I can gather, most people I have talked to take a similar stance to yourself. Even the brokers I have talked to have "officialy" advised against it, but with a wink wink, nudge nudge attitude. One even said to me off the record "it wont do ya any harm, sure isn't everyone at it"!!!
But I want to take everything into account (tax implecations etc), and take ClubMan's point of view too...as this is the biggest step i'll have ever taken in this big bad world !!!!
 
Sarah W said:
Bacchus - if you buy a property to live in and then wish to let it you need the written permission of the lender (in the mortgage conditions) plus all the above re tax relief, CGT and possible Stamp Duty will apply. Not particularly sound advice I'm afraid.
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Ok, point taken for written permission.. Is that difficult to get?

Bacchus said:
.... (be aware of tax implication though).
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yes, we agree on tax issues....

Sarah W said:
Not particularly sound advice I'm afraid.
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You are the last person i will try to challenge on the subject of mortgage BUT i 'll try, i feel brave today:) ......
Joke aside, why could that not be a sound advice...

Let say poolboybaz does not have enough savings for buying a property as "investor" now, but has decided he wants to buy a property (i am putting aside as to whether it is a wise decision or not, and will simply respect his decision for now)
So, could he not buy a property as "owner/occupier", get 100% FTB mortgage, save (eventually) on tax, avail of rent-a-room tax free money, and futher down the road when he has some savings, move out, rent his property, pay the relevant tax with his savings (that he has now and was not able to pay at the first place due to lack of savings)...?
 
Let say poolboybaz does not have enough savings for buying a property as "investor" now, but has decided he wants to buy a property (i am putting aside as to whether it is a wise decision or not, and will simply respect his decision for now)
So, could he not buy a property as "owner/occupier", get 100% FTB mortgage, save (eventually) on tax, avail of rent-a-room tax free money, and futher down the road when he has some savings, move out, rent his property, pay the relevant tax with his savings (that he has now and was not able to pay at the first place due to lack of savings)...?
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I don't have a problem with that and I'm sure the lender would grant permission if it was a couple of years down the road and it was obviously NOT a scam to buy the property as a residence when the buyer had no intention of living there. People's circumstances change. But that was not what was being suggested here.......

Sarah

www.rea.ie
 
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