Buy to Let Mortgages

brad

Can't see any threads on this. I am looking for information about Buy to Let. i.e where best to go for this type of mortgage? what protion of your mortgage should the rent be ? etc.

Any help appreciated.

herbiesjp

What property value/deposit/ rental income figures do you have?

silvercar

Gnerally speaking, you need 15% deposit and the rental to be more at least 25% more than the mortgage interest.

You also need to be a home owner yourself and have an income of at least £10k.

These are general rules, I would suggest seeing a mortgage advisor as its a minefield out there!

dunstonh

From a safety point of view, with increasing interest rates likely, property prices facing a potential drop, increased landlord liability, Gordon Brown increasing his claws into it and rental yields being very low, its probably a good idea to make sure you can afford 50% as much again on the mortgage you pay (all mortgages). Plus have around 6-12 months emergency fund for when you have no tenant or when a tenant trashes the place.

A lot of people are going to get the fingers burnt with buy to lets. Just make sure you have done your figures correctly and are willing to put up with the risks.

brad

Thanks for the replies.

I live in North Wales and house prices are still on the up here. They have never dropped but can go a bit stagnant at times!

I am looking to share the cost of the property with my brother in law. It will cost around £240K and should provide an income of around £700 - 800 per month. We can put down around £70k the rest would be on a shared mortgage. I have no mortgage myself and own my own property.

herbiesjp

So you would be looking for a joint mortgage or £170k with rental income of between £700-800 pm

You would need to be a little more exact with the rental income figures as that £100 difference can mean a huge difference in what a lender can offer you.

As it stands, taking the £800 pm rental income you would be limited as to what options you have on offer.

dunstonh

They have never dropped but can go a bit stagnant at times!

You mean they havent dropped in the last 10 years. They dropped in the the 80s and 90s.

I am looking to share the cost of the property with my brother in law. It will cost around £240K and should provide an income of around £700 - 800 per month. We can put down around £70k the rest would be on a shared mortgage.

Thats a gross rental yield of around 3.5%p.a. By the time you take costs into account, you are not going to make much at all. You are then relying on only the asset value. That itself will be potentially liable to capital gains reducing it further.

I dont want to sound negative. Just making sure you realise that what you are proposing is not that attractive for the risk you are taking. Too many have jumped on the buy to let band waggon without realising the potential shortcomings.

Wales suffered a 12% drop between 91-95. Growth between 96 and 2001 only averaged 5.25% p.a. Last year, growth was 7.3 making it well above the UK average but that still isnt that good.

To compare, the average UK property fund returned over 17% last year.

Just making sure you realise that when it comes to making investments, you dont have to make a choice between stockmarket and buy to let. There are other asset classes or variations to invest into. Plus you realise that the property cycle does indicate a drop is due if history is anything to go by.

MortgageMamma

I agree with dunstonH, I would back out of buying a buy to let in the present climate.