Buy to let - is it difficult please?

hethmar

We have only 4 years to our retirement when we plan to downsize. We have seen an ideal place now and we wondered if it would be wise to buy the property to let until our retirement and then sell our current house and move to the smaller one. At that point we would have enough money from the sale of this house to pay off the buy to let mortgage and surplus to live on for our retirement.

We have never had a buy to let mortgage. Will it be difficult to get one considering we are 4 years off retirement (56 currently). Do you have to get them over a shorter period than a normal mortgage as we can put down a deposit of about 40% on the new property but there is no way we could meet the monthly payments if the loan was squeezed into 4 years. Or have I got the wrong end of the stick.

Id be grateful for any help or advice please.

Debt_Free_Chick

Once you factor in the extra mortgage now, the cost of maintenance on the second home, income tax in the rent ....

I think you would be far better off downsizing now and overpaying your new lower mortgage, with the intention of paying it off over the next four years.

ginger_nuts

A BTL mortgage is not based on your earned income .It is based on your ability to pay . The mortgage would be based on the rental .
You can take out a mortgage for longer than 4 years .
Minimun deposit is 15% so if you have 40% deposit you wont have a problem .
A lot of BTL are done interest only with the view that they will be sold to make profit .If you intend to buy you could go interest only knowing you intend to clear the mortgage in 4 years .Do you no what your rental would be or how difficult or easy it would be to get tennants .
if you do go for BTL you must tell the TAX office within 3 months even if you havent made a profit .On a BTL you get tax relief on the mortgage .Keep receipts for everything .The more receipts the less tax

hethmar

Thanks people. It would not be practical to move at the moment, the business we have requires the space we currently have - so that isnt an option Im afraid.

Thanks Ginger, I wasnt sure if that were the case. The house is in a very desirable position and has been tenanted up to now. I think we will make an offer for it, although there is an awful lot of interest in it and basically it is underpriced for the current market. I think if we dont try then we will regret it as property in that particular area come up only rarely.

Many thanks for your input.

AndrewSmith

ginger_nuts wrote:

A BTL mortgage is not based on your earned income .It is based on your ability to pay . The mortgage would be based on the rental .

Although the lenders assess the viability of the mortgage on the rental income, a large number will want you to have a minimum level of earned income from employment ( Yes I know there are some who don't before the usual bashers jump in trying to prove me wrong and show how clever they think they are).

This is so they can satisfy themselves that the Buy To Let will be self sustaining, and is not being used to provide essential income for you (Unless you are a professional Landlord as a living).

The average requirement is that the rental income is 125-130% of the interest only mortgage payment. There are lenders out there who work on a lower percentage however the assumed rate of interest for the calculation is set so high that it would still work out as 125-130% on current interest rates.

hethmar

Thanks Andrew - as we have 40% deposit to put down we arent looking upon the rental as income, we basically want to secure a pretty unique property in a small road where in 20 years Ive only seen 3 come on to the market.

PoorDave

Is it definately going to be possible to rent this property?

It's not "too unique" is it? Or away form amenities?