BTL rates?

slopemaster

Please could anyone give me a rough idea of interest rates for interest-only BTL mortgage, both fixed and variable?

I KNOW the answer is "it depends" and I am going to see a broker, but just after a rough idea?

Plan would be to borrow up to £100 000 to buy a property costing up to £180 000. Currently have a low income, which might restrict choice of lenders. No problems with credit history etc.

GMS

What is your income? What rent would the property bring in?

No such thing as a rough idea on rate. BTL vary hugely as some have big set up fees whilst others have low or none with rates reflecting this.

1 yr tracker 2.49%, 5 year fixed 6.29%. Same lender. Plenty of rates in between.

Do you own a property currently?

slopemaster

Thanks for such a quick reply!

Joint income £25 000, much of that from rent on another (mortgage-free) property.

Also I own the house I live in, value £170 000, mortgage £70 000, costing £250/month interest-only.

Rent from new property would be £750- £800/month.

Thrugelmir

slopemaster wrote: »

Rent from new property would be £750- £800/month.

A low return for a property worth £180k. That's only a 5% gross yield.

AskMeAnother

The provable and acceptable income is your only real issue. All the other numbers stack up ok.

A lot of lenders have a minimum earned income threshold. You state a lot of your income comes from a currently let property.

If you are currently declaring the income and have self assessment forms to prove it, some lenders will still take it into account. Otherwise you're probably looking at using someone like The Mortgage Works as they have no minimum income requirement. They're rates are decent (ranging from 2.5% to 5.5% depending on fee structure) but the fees are higher than most in that LTV bracket.

Good luck!

Matt

slopemaster

Thrugelmir wrote: »

A low return for a property worth £180k. That's only a 5% gross yield.

Well, that's a slightly conservative estimate - but gross yields around here only seem to be 5-6% unless you are willing to get into higher-risk stuff like HMOs. What sort of yield would you think is normal?

I am new to this, so glad of advice.
The theory is - savings accounts pay less than inflation.
With property, the capital investment should keep pace with inflation over the longer term. So any return at all is good - though of course it is more hassle (and risk) than having a savings account, so that has to be allowed for.

Thrugelmir

slopemaster wrote: »

Well, that's a slightly conservative estimate - but gross yields around here only seem to be 5-6% unless you are willing to get into higher-risk stuff like HMOs. What sort of yield would you think is normal?

If its going to cost you 5% to borrow the money. Then in effect you'll be subsidising the purchase.

So better off leaving your other £80,000 on deposit (preferably in ISA's).

slopemaster

Hmm.
Well, I sort of see what you mean.
But I didn't fully explain.

The plan is actually to in effect use the money borrowed for the new place, to pay off the mortgage on the existing house (when the fixed term ends in a year)- as the new mortgage would be tax-deductible but the existing one is not.

(So it is effectively costing less?)

Tho I suppose it would be possible to just use the money to pay off the existing mortgage - as that is costing more (4%) than most savings pay after tax - without investing in another property.

If only it was possible to just stick it in a savings account at over 7%, like it was 3 years ago!

(Cash ISAs are already full.)

slopemaster

You are right though, the important Q here is, what return can I realistically get on this money by investing in property - and is it worth it.
Maybe I can post a separate thread about that, not on the mortgage board.