Though most first time buyers purchase homes to live in, it is possible to purchase buy to let property as someone’s first property.
Unless a first tine buyer purchases property with cash, they will need a commercial mortgage for buy to let property. Many lenders will not offer commercial mortgages for first time buyers, but a few will. A mortgage broker will be able to find a lender prepared to consider a buy to let mortgage application from a first time buyer. Buyers will need a large deposit as commercial mortgages provide around 75% of the property value.
A first time buyer needs to have a decent deposit to buy rented accommodation. For example, someone buying a house in Sheffield for the average house price of £161,025 will typically need a 25% deposit of £40,256. They will require a salary of at least £40,000 to be accepted for the mortgage and if they pay rent on their own home, this will form part of the affordability calculations.
If the landlord wishes to avoid day-to-day management, then there can be letting agent’s fees to pay.
Buyers will pay tax on their rental income and are responsible for all repairs and maintenance. They also need to consider that there will be no rental income when the property is vacant after a tenant leaves and before another one moves in.
If the buyer does their calculations accurately and fully understands all the costs that can arise from being a landlord, it is possible for buy to let property to be a worthwhile investment for a first time buyer.