buy to let mortgage - minimum deposit expected?

simpywimpy

Ive seen a lovely house at a great price that I would like to rent to a family member . Anyone any idea what % of deposit is likely to be needed in the current climate?

geewhiz

As an example, Lloyds TSB expect at least 25% as a deposit

dunstonh

Lenders are also more wary of having family members as tennents. So you may require more hoops to jump through. Plus, the rental yield has to exceed the monthly mortgage cost.

Your existing personal borrowing situation will be taken into account as well (as well as it impacting on future lending decisions as well). That may or may not be an issue to you.

poppy10_2

The rent you charge will need to be around 125% of your monthly mortgage payments

theartfullodger

HMRC will look at family member renting, probably question the rent received and quite possibly decide to tax you on what the market rent should be..

(You've obviously planned to tell HMRC...).

Tell you what: Why don't I buy it & rent it to your family member, then there'll be no complications & the family member will be living in the home you want them to be in.. Everyone wins!

And... you don't run the risk of losing more money when property prices tumble some more...

Gissa call....

Lodger

simpywimpy

The property I saw has been drastically reduced already and now been listed for auction. Its only a 2 bed terrace so nothing too grand and rents in the area are about £100 week.

anyone know what the interest rates are for btl these days?

sandford6016

You can buy on a normal mortgage and get obtain 'consent to let' from your lender. It saves all the costs of a btl mortgage. Ask your financial advisor on the best lender to do this for you, Northern Rock do mine, but understand they're not giving out mortgages at the moment?

jamesd

Get your statutory credit report from the three main agencies, sort out how much you have available as a deposit and take the package to a mortgage broker and ask. The broker will have some idea of the implications of your personal credit history, deposit amount and how keen lenders are on the area. For a terraced house the area shouldn't be as much concern as it would be for a newbuild city center flat.

If you have equity in your own home it may well be cheaper and easier to increase the mortgage on that rather than use a BTL mortgage for the new place. Owner-occupied mortgages are cheaper and you'll still get to deduct the interest on the money you lend to your BTL business from its rental income.

socrates

sandford6016 wrote: »

You can buy on a normal mortgage and get obtain 'consent to let' from your lender. It saves all the costs of a btl mortgage. Ask your financial advisor on the best lender to do this for you, Northern Rock do mine, but understand they're not giving out mortgages at the moment?

Can you really do that?

I wish people who have no idea what they are talking about would ......

sandford6016

Yes you can do that! I wouldn't have said it otherwise.

socrates

sandford6016 wrote: »

Yes you can do that! I wouldn't have said it otherwise.

What do you put on the mortgage application form when they ask about other mortgages and current outgoings and what they relate to?

Do you not think that every individual who decides to BTL would you use your method if it was so easy?

You may have done this and got away with or someone you know has done it.

Its one thing to advise someone to let a property without telling the mortgage company if the lender will not give them consent.

Its another to tell them to commit mortgage fraud - plus I am sure any decent mortgage broker would not touch this with a barge pole.

Plus every application is looked at in triplicate - not like the old days.

Unless you know of another way - please share...