Buy-to-let at 18?When a mortgage provider looks at an application, they want to see indications that their money is safe and the applicant can make the repayments even if the property suffers a period with no tenants and thus no rental income.
The basis of a buy-to-let mortgage is that the property pays for itself, but there still needs to be a secure backup in terms of the mortgage holder being able to make monthly repayments. Can you prove that at 18? In most cases, sadly, the answer is no.
Minimum salary, affordability and credit history – the buy-to-let mortgage criteriaWhen determining suitability for a buy-to-let mortgage, your personal finances are put under scrutiny. First up is your credit history – and at 18, the chances are you don’t have one.
In the UK, credit reference agencies (CRAs) collate a large amount of data regarding our spending and payment history to form our credit report. Without any legal ability to get credit before your 18th birthday, someone just turned 18 hasn’t had the chance to build up such a history. Unfortunately, although no history isn’t quite the same as a bad history, it is treated that way by most mortgage lenders. With no information, the lender simply has nothing to go on and taking your word for it isn’t a responsible decision.
That said, at The Mortgage Hut we work with many lenders, and many of them are willing to discuss the situation with you. If you can make a solid impression, then it might be possible to get past the issue of no credit history.
Salary is next. Many lenders stipulate a minimum salary of £25,000 – and that you’d been doing so for a while. Not an impossible amount for an 18 year old to achieve, but unlikely for many. If you are earning under £25,000 you can expect a buy-to-let application to be out of your grasp.
Then affordability. This is a calculation based on your income and your outgoings. There’s a good chance that your affordability is strong if you already make the salary requirements, but it still needs to be taken into account.
Buy-to-let at 21!It’s for the reasons described above that most lenders first start looking at applications to become a landlord through a buy-to-let mortgage at 21. Three years into your credit life you have had time to build up a solid record, your salary is likely more stable and your affordability is not just good, but proven.
At The Mortgage Hut we know a huge number of lenders who would love to talk to responsible young landlords-in-waiting!