100% BuyToLet Mortgage

bbasra

Hi,

i want to purchase a 1 Bedroom BrandNew Appartment for letting. They will require £1k as deposit and 10% £13k within 21 days. The appartment is £130k and it will not be complete until end of Summer.

As i am going through the purchase of another property, i really dont have any money left over spare, however, i really want to purchase this appartment for investment.

Can i get 100% Mortgage for this amount. I could borrow the desposit from my parents for now and then when i complete, borrow the full amount and pay them back.

Any Advice?

Wickedkitten

IIRC you need to have a 15% deposit to get a BTL mortgage. Also I may just be talking out of my backside here, but I remember reading somewhere that due to new rules you also have to be a homeowner to get one, the rental income needs to be 130% of the mortgage payment, and there has to be a yield of 8%.

dunstonh

Are you really sure you want to go into buy to let now. Especially considering the low yields and the amounts you want to borrow and the fact you are doing another one at the same time.

Buy To Lets at this time are not short to medium term good value and going to 100% is very high risk.

I will let the mortgage advisors answer the bit on mortgage availability for 100% buy to let but my gut feeling is that you would have a hard job getting it unless your income really does stack up.

herbiesjp

100% BTL mortgage of £130k - sorry no can do

bbasra

i am currently a home owner but selling my property stc and purchasing another one.

Sorry. what are the yields ie 8%.?

My parent are willing to give me the money so i dont really need to pay them back so i really could use that.

Would i be able to borrow 117k at a fixed rate for 2 years with no over hang? LoanToValue of 90% or is that still not enough?

Tassotti

I am not a mortgage advisor, but, from my experience, the maximum you can get on a BTL is 89% rates at about 5.5%

To work out yields, take the monthly rental payments multiply by 12 and divide by the property purchase value. You then have to consider void periods and maintenance charges.

You will not get 100% mortgage on a BTL full stop!!

put some figures here and let's see if its worth it

Tass

bbasra

I could do 89%. I am looking at getting 650pcm.

dunstonh

Thats a 6% gross yield before mortgage interest, tax, insurance, maintenence, letting agency and liaiblity is considered.

So, if you assumed monthly (or equiv) £520 for interest only mortgage (702 repayment), £20 insurance, £20 maintenence, £97 for letting agency, you are looking at £657 costs per month.

In other words, you are paying someone to live in your second house.

herbiesjp

If you have an 11% deposit - then indeed you could look at 2 year deals around 5.39%.

The fees may be a little on the high side though

silvercar

The only way I can see you getting a buy to let mortgage is to buy the property and live in it. Then after a few months approach your lender and tell them that, due to a change in circumstances, you would like to convert the mortgage to a BTL as you will be living elsewhere. Lenders are usually obliging with this, though they may add 1% to the mortgage rate.

herbiesjp

silvercar wrote:

The only way I can see you getting a buy to let mortgage is to buy the property and live in it. Then after a few months approach your lender and tell them that, due to a change in circumstances, you would like to convert the mortgage to a BTL as you will be living elsewhere. Lenders are usually obliging with this, though they may add 1% to the mortgage rate.

But is the OP not buying another residential property at the same time?