Financing a buy-to-let

ChrisS

Having recently let a room under the government's Rent a Room Scheme my eyes have been opened to the potential for letting property since I last did so in the 80's / early 90's.

There are plenty of potential properties to select from locally but financing a purchase is an issue with fees and LTV stipulations.

We own a propery worth approx £170k - no mortgage or other debts. I've got about £7.5k in savings that's rising since letting a room in my current house.

The properties I'm looking at would probably sell for ~£105k an I'd need ~£5k to make it ready. I could expect to realise £550 pcm rent.

It seems to me that current mainstream lenders' conditions and fees etc are prohibitive so what are the current alternatives? Is there anyone like Zopa out there who will lend to buy property? Could I get a loan from a foreign bank? Could I offer my current home as security for a better rate / access to lending? etc. Are there websites for finding someone to go into partnership with in buy-to-let?

BitterAndTwisted

See an independent mortgage-broker. For a BTL mortgage you will need a 25% deposit and the prospective rental-income be 125% of the mortgage-payments. Alternatively you could see about raising a mortgage on your currently mortgage-free property and buy the property to let outright.

To be honest, I'd stick with continuing with having a lodger for as long as possible. No taxable income to declare and you can get shot of a lodger very easily. Going into bsuiness as a BTL landlord is a world away and the possible risks much greater. But I suppose it's all about your attitude to risk.

jamesd

You certainly can borrow against your own home to buy a BTL property and the interest rates and fees are normally lower than for a BTL mortgage. The interest can still be deducted from the rental income.

googler

Just bumping this thread to the top to move the football spam to the bottom even quicker.....

dimbo61

So you want to go to the expense of borrowing £105K plus fees and then spending what £5/10K on getting it in a safe state to rent to earn 6% before TAX and other costs.
Very poor yield considering the joys of being a LL

ChrisS

One of the motivations would be a capital gain over 25 - 30 years.Can't see demand falling off for housing in England or supply rising very much either despite the government's best efforts. Hopefully that would justify the financial and time investment.

Interesting to know that interest repayments on a remortgage of my existing house could be set against rent for tax purposes.

theGrinch

you could find a like minded person wanting a better return (given the risk) and do something in partnership or sell them the idea.