Buy to Let query - please help!

chicklet_2

Hi, my partner and I are considering purchasing a property to rent out.

However, he is a self-employed musician, (for over 3 years), who does his own tax returns and doesn't have an accountant.

And I have just left my full time job to become self-employed myself as a letting agent. Consequently, I am not earning any dosh yet, and certainly don't have any tax returns etc! :-/

Can someone advise me on the actual likelihood of a mortgage lender granting us a buy-to-let mortgage, based on these facts?!

Is there such a thing as a self-cert buy-to-let?

We would be intending to put down 15% as a deposit, but could push it to 25% if it were the only way we might be granted a buy-to-let mortgage.

Any advice etc would be very gratefully received!

herbiesjp

Hi there

For Buy-to-Lets the lender bases the loan amount on the rental income achievable. As long as this covers the mortgage payments by (each lender has different ways of calculating) around 130% then you should be OK.

MOst BTL lenders do not require proof of your own income - some will require proof of a minimal amount.

There is also a lender that does a self cert BTL but the rates are not that fantastic, but I do not see why you would have to go down this route.


As usual, this information is purely generic, as I do not know any of your circumstances.

Fairdo_2

Agree with last post totally.

There are several Lenders that do not require a minimum income level for personal income, as this is designed to pay for itself in reasonable circumstances, which is why a certain amount of profit margin is required (Again, as mentioned, this differs between lenders).

Is this a good time to Buy To Let, or would that money be well served in helping you set up your new business?

chicklet_2

Hi,

Thank you for both of these points.

It makes sense now about the income thing - ie, different for btl rather than an ordinary mortgage. And the proposed rental should more than cover the general 130% lenders ask for.

Hmm. Just whether we take the plunge now.

I suppose in all good sense, we should be putting the money into the business, but my ideal is to have it paying for itself and growing itself, and not have to use any additional money. ie. the money we have personally should be for us to use for us and not for my business - if that makes sense!

In more good sense, it is also debatable, whether now is a good time to start thinking about btl, considering all the media kerfuffle surrounding the property market - but I guess that query is for a different posting!

thanks again.

dunstonh

In more good sense, it is also debatable, whether now is a good time to start thinking about btl, considering all the media kerfuffle surrounding the property market - but I guess that query is for a different posting!

Crystal ball job. You have missed the bulk of the growth and house prices are now showing small decreases so your timing may not be good. However, economically there is no reason for them to drop. It just seems to be consumer concerns causing the drop.

There may be a pick up in interest in 2006 when property can be added to pension funds. However, recent warnings over the suitability of residential property for retirement planning may put some off.