buy to let morgage

moonrakermagpie

Hi there,

We are going to buy to let, house price £157.000 to get to a 15% deposit we are paying around £25.000, leaving around a £132.000 morgage.

We have been offered an interest only 6.34% fixed for 5 yrs from my HSBC bank. But they would require a repayment vehicle.

Skipton has approved an interest only at around 6.5% (maybe 6.6%) fixed for 3 yrs or more, and do not need proof of a repayment morgage.

We have pulled away from the £157.000 and have been chased by the EA who suggests they may well take £150.00 or less

Could anyone point (or lead) us in the direction of a really cheap % rate and preferably a tracker or variable morgage rate.

Many thanks

Moon

dunstonh

Lets take a closer look at this deal.

You are putting down a 15% deposit. So, its probable that within a year or two you will be in negative equity. So, with capital growth unlikely to be much benefit over the short term, you need to look at the rental yield. Especially if you look at a 3 year deal (which would probably see you in negative equity on expiry).

Your mortgage would be 6.5%. What is the rental yield (gross and net)?

Personally, unless you are a builder (and can do up a property bought cheap) or have an exceptionally good rental yield, I think you are going into this high risk investment area at the wrong time. How do your figures stack up?

moonrakermagpie

dunstonh wrote: »

Lets take a closer look at this deal............ How do your figures stack up?

Hi thank you for the reply.

We are going to let to a relative and have told the lenders this.

The tenant is going to pay £655 per month, and will stay in the property for at least 10 years.

We have had a letting agent "value" the letting value and have been told that it would let for £750 per month.

So!! as well as being a buy to let, we are buying to improve the tenants living standards.

The rent will just about cover the morgage payment.

Cheers

moon

silvercar

Are these BTL mortgages. I thought some lenders would let on a residential mortgage if you were letting to a relative?

Why do you need a repayment vehicle on a BTL mortgage? Once you have retired from the letting business, you sell the property!

moonrakermagpie

silvercar wrote: »

Are these BTL mortgages. I thought some lenders would let on a residential mortgage if you were letting to a relative?

Why do you need a repayment vehicle on a BTL mortgage? Once you have retired from the letting business, you sell the property!

I will enquire as to your question one.

IF so would a residential morgage be "cheaper"

Wel as far as I can remember, HSBC said the would need a repayment vehicle!! Will check this also!!!

moon

socrates

As far as I knew HSBC were not offering BTL Mortgages - this is according to my Account Manager @ HSBC. Interested if this is a deal for Premier Account holders only.

And as for a 15% deposit on a BTL in the current climate that also sounds dubious.

I will follow this one with great interest - however at 3%+ above base and arrangements fees at around 2.5%+ for most BTL mortgages I will adopt a sit and wait policy.

jamesd

Do you have equity in your own home? You can borrow secured on your own home and lend that to your letting business and still deduct the interest from the rental income for tax. That may get you a cheaper mortgage. If you can't do it for the whole purchase price it may get you to a lower LTV band on the BTL mortgage. Residential mortgages are usually cheaper than BTL mortgages.

moonrakermagpie

socrates wrote: »

As far as I knew HSBC were not offering BTL Mortgages - this is according to my Account Manager @ HSBC. Interested if this is a deal for Premier Account holders only.

And as for a 15% deposit on a BTL in the current climate that also sounds dubious.

I will follow this one with great interest - however at 3%+ above base and arrangements fees at around 2.5%+ for most BTL mortgages I will adopt a sit and wait policy.

I am a Premier Account holder, maybe you are correct, I will check!!!!

What do you mean by "And as for a 15% deposit on a BTL in the current climate that also sounds dubious". The morgage is with the Skipton.

Cheers to Ya all!!!!

RomansProperties

Skipton have pulled all their buytolet products at the moment and new ones are coming out.
Although they were only offering 70% LTV a week ago
I have also heard the same from the HSBC about buytolet mortgages so would be interested in knowing more.

socrates

"We are going to buy to let, house price £157.000 to get to a 15% deposit we are paying around £25.000, leaving around a £132.000 morgage.

We have been offered an interest only 6.34% fixed for 5 yrs from my HSBC bank. But they would require a repayment vehicle."


You mentioned 15% deposit and HSBC in your OP.

I do not know of any BTL mortgages which will allow a 15% deposit in the current financial climate - in fact even before all this most wanted 20% minimum.

But interested in the outcome please keep us posted