Can I / should I get a BTL mortgage if I have assets but no income?

Looking for some advice or recommendations here, if anyone can help.

I have a house which is worth ~800k, and about 1m in stock and cash. I'm not working at the moment and have no income.

I want to do work on the house which will cost up to 400k.

I want to borrow 200k--400k towards the works, and buy one or two one-bedroom apartments in Dublin using the rental income to cover the loan.

Any lender I've spoken to (AIB, Ulster Bank, Credit Union) has said that a current income is necessary for any mortgage lending, regardless of assets, future employment prospects, etc.

Are there any other lenders that might take this on?

And is it a terrible idea? I've read a lot of the caveats here about the uncertainty of property investment. The appeal to me is that if I get well-situated flats, I can do a mix of short-term and long-term lets, to balance the income generation against the amount of work involved.

Where is the money to buy the properties going to come from?

Does your investment portfolio not throw off some income?

Can you take a tenant into your home and avail of "rent a room" relief?

You're basically looking for a bank to lend you money so you can invest in buy-to-let properties and do up your house when you have no income coming in. You're 10 years too late for that kind of loan from an Irish bank. First question I would ask if I were your bank manager is why are you asking them to take the risk when you have €1m in current assets which could easily be used to fund what you want to do.

Hello,

There was talk of Dilosk doing low LTV residential mortgages, based on rental income alone. Not sure if they are actually lending for new customers yet and if so, if they went ahead with this concept or what their rates are like, but might be worth checking out.

Hi Bartle

I have moved this to the Money Makeover Section as you need a more fuller review of your finances and not just a simple "X lender will give a loan."

What age are you?
What are your employment prospects?
Do you have dependants?
Have you a pension fund?

If you are 90, and you want to spend €400k on a house worth €800k - fair enough.
If you are an unemployed 50 year old, then it would be very unwise.

However, there are no circumstances I can envisage where you should be borrowing to buy investment property.

Brendan

Many thanks for the replies, the opportunity to discuss this is very helpful.


Gordon, I would take the money to buy the properties from the cash and investment portfolio. I got the idea that rather than take the money out and sink it into the works, I could finance the works for the same cost via buy-to-let investment and come out ahead. But I don't know whether that actually makes sense..!

The investment portfolio is not income-oriented and is running a loss at the moment; I think of the money there as parked long-term. The biggest holdings are broad-based ETFs (Schwab US Large Cap Growth & Value, Vanguard FTSE Europe ETF, iShares MSCI United Kingdom ETF); I'm not weighed towards dividends.

I don't believe that I could do well actively managing an investment portfolio to generate income. I'm more confident that I could 'actively manage' a few apartments, in the sense of doing short-term lets in the summer, etc.

I can't take a tenant in at the moment, as the house doesn't have a suitable room. Anyway, as I don't have an income at the moment, income tax relief is not something I'm looking for. But I do expect to let out a part of the house when the renovations are done.


MrEarl, thanks for that, I hadn't heard of Dilosk. They are not lending yet but I will talk to them later in the week to see if anything would be possible there.


And daddyman, yes, you've summed it up! I would try to make the case that it's relatively low risk for the bank, based on the assets remaining, my earning prospects, etc.

Hi Brendan, apologies for not supplying more context in the original post. I'm in my mid-thirties, married with two young children. My employability is pretty good; I'm a computer programmer with good experience and qualifications. I'm taking a break from that for a year or two, I don't anticipate that it would be a problem getting back into it.

As for a pension, I have E150k in a US-based 401(k) (Vanguard Target Retirement fund). That's the least liquid part of my portfolio; it's basically off-limits until I'm 60.

> However, there are no circumstances I can envisage where you should be borrowing to buy investment property.

OK - I guess this is the nub of the question. I'm thinking of the mortgage as a sort of hedge that lets me preserve the expected long-term (but volatile) performance of my ETFs, while taking a punt on Irish property. A central assumption is that an attractive, central apartment in Dublin is most unlikely to end up a disastrous investment. I'm in a position to put time into doing up and managing the investment property to help get a better return. But I'm realizing that given the total cost of the mortgage, it's a pretty expensive hedge--if it even works on those terms at all.

I'm most comfortable leaving the bulk of my money in index-tracker / passive ETFs over the long term, but I want to find a flexible way of generating some income. Investment property appeals, but if I do both the renovation and property investment un-financed I'll have gone to majority reliance on Irish property in my portfolio.

If I can finance the property purchase, and have the properties service the loan, I have somewhat flexible income generation while retaining my equity holdings. If the property investment goes badly, I will at least be able to service or pay off the mortgage from my other assets (or worst case, sell at a loss). If it goes well, I'll have retained my portfolio and could leave the holdings alone or take out some cash to start a business down the line.

I'm realizing that the renovations are not really part of the question here: it's really just about the advisability of borrowing to invest in property.

Anyway, sorry for the length of this. Any thoughts gratefully received.