First Time Buy to Let Interest Only ?

bwlv1

Hi All,

Hope you can help with some advice, i am already a homeowner and i am looking to purchase a buy to let property for which i have 25% deposit, the common payment for buy to let mortgages seems to be interest only which is ideal for me. My question is will i be able to get an interest only buy to let as currently i don't have the money in savings or any investments to repay the capital, of course i will plan to and start to accumulate this once the mortgage is in place but how stringent are lenders now, will they accept a certain degree of capital growth expectancy especially with a 75% LTV as there is already some security there? Does anyone know of any or have recent experiences of getting buy to let and not having repayment funds already in place, and any lenders in particular that are ok with this as i read on coventry building society that they will only allow interest only at 50% LTV?

Thanks in advance

Simon_gloster

Repayment plans are asked as a form of responsibility, but as btl's are not regulated, saying you'll sell it in the future is a perfectly legit way to overcome this issue

kingstreet

Sale of property is a perfectly acceptable way of repaying an interest-only BTL mortgage.

bwlv1

Thanks for both of your replies, which filled me with optimism, but then i have come across a few news articles such as stating things like; Natwest will only allow interest only if main applicant has income over 50k, santander limiting interest only to 50% ltv. Would either of you be able to point me in the direction of lenders that are possibly less restrictive on interest only so i can have a look at their websites myself

kingstreet

You're possibly reading about residential lending.

High Street lenders aren't the best source of finance for BTL business IMHO. You're better off looking at the specialists in this market or talking to an independent or whole-market broker.

bwlv1

Kingstreet you could be right there. Could the mortgage works, legal and general and paragon be the kind of places to look ?

GMS

benwolves wrote: »

Kingstreet you could be right there. Could the mortgage works, legal and general and paragon be the kind of places to look ?

It would be unfair and potentially dangerous for a mortgage adviser to mention lenders to you as they have no idea of your circumstances.

Best thing to do is speak to a broker and find a way forward.

Do you have an income? If so how much? Many lenders have minimum incomes so you need to ensure you fit criteria.

Rent needs to be sufficient to fit criteria, generally 125% of mortgage payment. Some lenders have a notional rate for calculations, others use the actual rate.

Buy to Lets can often have big arrangement fees so it could be better to take a higher rate with a lower fee.

A broker is well worth a chat especially as many Buy to Lets are available through brokers only.

bwlv1

Thanks GMS, i understand the rules regarding mortgage advice that's why i was giving names and just hoping for yes or no's rather than ask anyone to suggest any particular bank Just to be cheeky, would any of the banks i listed possibly be a 'yes'?

kingstreet

The lenders you mention are broker-only AFAIK so you might as well start looking for a good independent or whole market broker now. You'll get the best deal available that way.

Use https://www.unbiased.co.uk in your area, switching off the "website/email only" option so you get a full list, not just the paid-for adverts.