trying to get my head around BTL idea

de1amo

İ own a flat worth 175k in the uk with an İO mortgage of 55k mortgage and i am looking to raise a further 40k to buy a further home where i live abroad.
Currently it is empty but its rentable value is 800pcm.-in the uk i have a small occupational pension which pays me 650pcm net which pays all the outgoings on it now but if i increased the mortgage i would look to let the place through a proper agency(i can cover any amount of mortgage if it is empty because i earn well abroad and will have no other commitments other than my uk mortgage)
-currently i rent a holiday home out here which costs me 280 pcm which i feel is a negative action when i have so much equity(i own our main home abroad which is valued at 250k)-i also own a thriving business which is secure.
how would they look at me for a BTL mortgage based on these figures??

Senior_Paper_Monitor

What are you trying to 'get your head round'.

Sounds easy and perfectly sensible to me (probably need a broker to process if you are rarely in UK - they also have access to many deals not available direct for BTL)

anh1904

The interest part of the BTL mortgage is an allowable expense against the rental income for tax purposes, as are certain other expenses.

There would be insurances you ought to research thoroughly too, and then the risk isssue if you end up with a dodgy tenant.

I think there's a residential letting societly (Association of Residential Letting Agents) or something like that who can potentially give you much more complete advice on the topic.

Your mortgage rate is likely to go up on any BTL product, but given the equity situation, it really hadn't ought to be an issue at all.

de1amo

Would i get a 95k mortgage based on those type of incomes within the uk? i am so out of touch with the lending criteriors in the uk--plus what type of hike in rates do BTL equate to?--the mortgage rate where i am in the world is about 10pc which subdues prices and keeps rents down!

Senior_Paper_Monitor

The OP doesn't really need ARLA (the clue is in the name - they represent 'letting agents' as a trade body, they don't deal with individual landlords).

A good starting point would be a whole of market broker who is regularly active with BTL arrangements (many of whom, we certainly do, can assist with with all the 'extra curricular' issues and provide introduction to good letting agents in the area).

ARLA and most of the letting agents have no or very little knowledge/involvement with the mortgage side (although they are slowly improving their links to appropriate advisers).

Senior_Paper_Monitor

Easy answer Mr de1amo is yes - should be getting something near half the rate you refer to and your suggested rental will comfortably meet the standard 125% rent:mortgage ratio required.

Senior_Paper_Monitor

Expat status will lose a few lenders from the options - but still very do-able.

de1amo

how do you actually prove rental income to the lender--is it an assessment from an estate agent because i am not really forced to rent it out because of my income abroad but would like to raise the 40k via BTL mortgaging or is there another way i can do it?

GMS

Lender's surveyor would confirm the rental value when they value the property.

de1amo

do you have to produce accounts and a tax return for the lender/taxman even if i dont let it?

Senior_Paper_Monitor

A good letting agent will handle the tax reporting and payment on the property as a stand alone buy to let. Would need to know more about your overall status to comment oin anything wider (continuing to own property in UK when going expat has some potentially quite wide ranging implications) - and specialist professional accounting/tax advice would be advisable.