Mortgage for investment properties

sovereign

Hi,

scenario is such, there are 4 people who are looking to buy 2 investment flats in the region of 190K each as investment properties. Whose names would be best to have the mortgages and thus the deeds of the house on. Can 1 person obtain a mortgage for 2 properties which are next to each other and are being bought of the same person or do we need to have 2 people to get a mortgage each.

Both these people would be first time buyers.

Is it better to start a company for investment purposes and tax purposes. Is there anyway round this.

I may not have explined this really well. Please ask if you can help!!

herbiesjp

There are some lenders that will allow the same person to buy two properties beside each other - are they terraced houses, semi's etc? As for the tax aspect. it depends on how many properties you are looking to add to the portfolio. If it is going to remain relatively small, then no real benefit. If however it is going to be substantial, then it may be worth having a chat to a tax adviser.

sovereign

Can you tell me which lenders do this and what a person will need to have ie payslips etc or are they quite lenient towards giving mortgages to anyone as is the case nowadays.

sovereign

Sorry the property is a semi-detatched flats both next to each other.

69xians

I'm a little confused by some of the information you have stated but I'll try as best to answer your questions from my interpretation and from missing information.

If there are 4 buyers that are looking to buy two properties as a 'partnership', it is possible with most lenders to have as many as 4 applicants on a mortgage application to purchase an investment property. If there are 2 separate properties and therefore 2 sets of title deeds for the flats then you will need 2 mortgages; 1 for each property but that's no great shakes, most lenders will lend on up to 5 - 10 properties. If these are investment properties then I guess your intention is to let them and that they will be what is known as 'self funding', that's to say the rental income will cover the mortgage payments. As a general rule of thumb lenders that specialize in 'buy-to-let' mortgages are looking for a minimum deposit of 15% of the purchase price and the anticipated rental income must cover the interest-only mortgage payments by at least 125%-130% depending upon the lender. With regards the applicants income, lenders in most instances will be looking for a minimum income of anywhere between £15,000-£25,000 per annum. This is so that the mortgage payments can be serviced should there be any periods of non let e.g. between tenants or even if the tenant forgoes on their rent! But for the main, the most crucial aspect is that the mortgage is seldf funding as described.

You can set up a limited company for the sole purpose of property management but most lenders won't lend to limited companies, in fact I can actually only think of two of the top of my head, most lenders prefer to have individuals, I believe this is because you have greater personal liability and the lenders have greater security.

Probably the biggest issue you'll have is that most lenders will not lend to first time buyers, preferring that at least one of the party has a resodential mortgage, this is probably so that they have some track record of your ability to service a large financial commitment of this type.

There are alot of lenders out there, each has its own lending criteria and the above are general rules of thumb. As you can probably guess I know a little of the subject but that's because I do it day in day out but it certainly pays to get qualified independent advice to ensure that you do not end up with any costly bad experiences. I can't recommend the most appropriate option or lender because I know too few of your details but it is worth noting that at this moment the property market is awash with investment properties and in many regions rental yields are down, this may not be the most apprpropriate time to buy in this market.

Good luck

flossey1970

Is it true that financial advice will diff between i.e. England, Scotland, N.Ireland. I'm from N.Ireland and I am serioulsy considering purchasing by first property as a Buy To Let. I'm living at home relatively rent free so the Buy To Let looks very appealing.