Getting a mortgage at 19

Hello all!

I'm 19 and have enough money for a down-payment on a house. I am looking to buy to let.

I am looking to buy a property in the £180-220k range.

I am playing on buying this property in London where renting prospects are high. I am planning on paying off the mortgage with the rent payments. (My father owns other properties and also pays off the mortgages for them like this, and profits what's left over).

My father is self-employed. I am planning on becoming an 'employee' of his company where he 'pays' me a high wage. Let's say £40k/annum. So I can show the bank I could pay off the mortgage if for whatever reason I cannot rent the property out. I am planning on showing them 'pay-slips' if required as evidence.

My father says it can work out. Could someone please suggest some problems in this line of thinking? Reasons why the bank would still refuse a mortgage?

I am trying to make my plan robust before going forward.

EDIT: I'm currently a full time student. I'm not sure if this will affect anything since I'll be telling the bank that I'm a full time employee. Not sure if they can check that I am a full time student or if I need to wait till graduation for this to work.

Thanks!

Find an experienced broker that specialises in buy to let finance.
A lot of mortgage companies won't offer buy to let mortgages to under 21's.
Buy to let finance typically requires a minimum 20% deposit and only cover up to 90% of the property price at valuation.

Have you included all the most forseeable costs into your calculations?
Stamp duty, legal fees and those of other essential property professionals.

Be very wary about making statements about your annual income or monthly outgoings that are factually inaccurate.
Remind your father that the payslips that you have to share with a bank or other mortgage provider could easily find their way to the Inland Revenue for use as part of a tax investigation into either one of you.
The last thing that you or he needs is to be the subject of a investigation into tax evasion, fraud or some other crime that carries a stiff imprisonment sentence if convicted.
Good luck!

You'll have to show bank statements. How will you explain SFE loans? They go through your acconunts in great detail too querying payments so beware. I'd wait until you are graduated, over 21 and in a full-time real job.

You will need bank statements going back several months to show you are in steady employment, which you don't have. The bank may well be sceptical of a 19 year old earning £40k (and rightly so).

It sounds like you are planning on lying to a bank to obtain a mortgage. This is a bad idea for many reasons.

Can't I have the SFE loans come into a separate account? Or stop the loans altogether the year I'm getting the mortgage (let's say 2022-23) and pay the relevant expenses myself that year?

You have to show all accounts ... you'd be paying tax on 40k and NI. This sounds foolish in the extreme.

Thank you!

Yes, I've included the stamp duties legal costs etc in the calculations.

I was just unsure if the bank would give a mortgage at such a young age. Would be a shame since I'd love to get onto the property ladder asap.

As for the legal implications- I'll certainly keep that in mind, thanks!

You're welcome.
Have you considered buying in areas outside of London too?

I'm planning to buy a property within the next 13 months.
Can't stretch as far London property prices.
I'm buying alone and none of my jobs are full time or on permanent employee contracts.

How old are you, if you don't mind me asking?

I'm 27.

I'd wager that the bank would do enhanced diligence if a 19 rocks up with a £40k salary and is "employed" by a family member. From their POV it's going to set off every money laundering alarm bell imaginable; it's going to look like you're fronting on behalf of someone else at the very least.

The following question is from 2016, but the gist is the same, (although lenders may be even more averse now):

Guardian > At 20, am I too young to invest in buy-to-let property?

Fundamentally I agree that getting on the property ladder as early as possible is a good idea. But if you're having to cook the books to get started, you're not ready.

Great stuff, houses might take a tumble with interest rate hikes, keep yourself updated with the Financial Times

I'm expecting a property crash before the end of 2023.

What if I simply don't get a student loan and pay the expenses myself for a year

Thanks for your reply and your link to the article. I had a read through it and some things were certainly an eye opener (especially changes to how rent is taxed!)

Regarding my 'employer' being a family member, my dad is the owner and managing director of the company. If someone below him, say one of his managers, employ me, would this concern still stand? (So the 'boss' of my 'boss' would be my dad).

Would they search up the company and look up the names registered at the company house?

This won't work you know ... my son bought a house last year so I do know how much more scrutiny there is due to money laundering rules.

Do you want to end up with a criminal record?