Can I get a mortgage higher then 5x salary if...

aj3001

If I were to get a 100% mortgage, 30 years interest only on a buy to rent basis, covered under a guaranteed rental income scheme could I go above the 5 or 6 times my salary? As under the guaranteed rental scheme I could afford the repayments.

I am not looking for anything stupidly big, but I'm on about £15k pa, which gives me about £75k to play with, which will get me very little around Stevenage unless I want to double it!

JoeK_3

aj3001 wrote: »

If I were to get a 100% mortgage, 30 years interest only on a buy to rent basis, covered under a guaranteed rental income scheme could I go above the 5 or 6 times my salary? As under the guaranteed rental scheme I could afford the repayments.

I am not looking for anything stupidly big, but I'm on about £15k pa, which gives me about £75k to play with, which will get me very little around Stevenage unless I want to double it!

You will need to clarify one or two details about your post.

1) Is this a buy to let?
2) What deposit do you have, if any?
3) What rental income has the property been assessed on?

The reasons that I ask is:

Generally, buy to let is not assessed on income but rental income.
Normally, a 100% buy to let is not available.

JoeK

aj3001

100% mortgage, so 0 deposit, just take the mortgage for the full amount, yes it would be buy to let and I don't have a property in mind yet, I need to find a price range I can look at before I get that far!

UK007BullDog

For Buy To Let properties you need at least a 15% deposit.
The rent you get needs to cover the mortgage payments by up to 130%
Taking a 1 year interest mortgage is the same as a 30 year interest only mortgage as you are only paying the interest, the loan amount always stays the same.

Then the rental income will decide how high the mortgage payments could be. If the proeprty is expensive but rents are low you will then have to put more into the purchase price. Then there is stamp duty and surveyors costs, solicitors costs and most BTL mortgages have fees as well.

I think you need to read up on BTL's as going by your questions you do not understand the system. You need to be able to cover void periods etc.

Dont believe the hype about being able to buy property without a deposit. Its just hype and a con to get people to buy their strategy books etc.

ManAtHome

What's this "guaranteed rental scheme"..?

homer_j_3

UK007BullDog wrote: »

For Buy To Let properties you need at least a 15% deposit.

I think you will find that this is not accurate albeit the norm. Some lenders only need 10%

The rent you get needs to cover the mortgage payments by up to 130%

once again this is not accurate as many lenders have different lending criteria. Some will do 100%, 110%.115%.120%,125% etc...
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HelpWhereIcan

My interpretation of what you have posted is that a developer has offered you a property with a rental guarantee (possibly on a leaseback scheme). They may be doing it on the basis that they think you are an investor with the deposit available to get a buy to let mortgage ie. the 10%/15% etc that others have mentioned.

A lender MAY take the rental guarantee into account (particularly if it is on a leaseback scheme - eg the developer rents the property back off you to use as a showhome/sales office etc), but most will still expect the market rental to be enough to support the loan as, in theory, their mortgage will run well past the rental guarantee period.

The main issue you will have is that if you are asking a lender to give you a 100% mortgage, they will want you to be using it as your main residence which you patently won't be if you are benefitting from a rental guarantee.

Is there any way you could get a deposit together and get the mortgage as a buy to let?

Alternatively, if the rental guarantee is on another property that you own outright, there will be lenders who may look at using that income.

Post a bit more about exactly what the situation is and someone may be able to give you a few more specific pointers.

Get some advice from a whole of market broker. Use personal reccomendations to pick one or even something like the Yellow pages etc. No harm in speaking to more than one and always make sure to ask the questions Martin suggests in http://www.moneysavingexpert.com/cgi-bin/viewnews.cgi?newsid1101649966,86816#step2. Be careful of anyone who approaches you unsolicited and use the services of a face to face adviser unless you are confident enough to deal with someone via post & email.

Hope this helps

Good Luck

UK007BullDog

homer_j wrote: »

I think you will find that this is not accurate albeit the norm. Some lenders only need 10%
once again this is not accurate as many lenders have different lending criteria. Some will do 100%, 110%.115%.120%,125% etc...

[/QUOTE]

Hi Homer,

I am aware of that. However I believe if the purchaser has to start looking at deals like that (which by the way have huge fees, caveats and will cost you more and the risk is higher) where the Landlord will probably have to supplement the cost of the property out of his own pocket, then the potential landlord, especially if doing it for the first time, should keep his fingers from deals like that. A couple of rate rises and the whole deal falls apart with a repossession looming on the horizon.

If you cannot do the BTL on the standard terms you are losing money and why subsidise someone elses living/rent? Just does not make sense.

PS: Those that offer deals like that are also subprime and there are not that many. I would stay well away from them.

homer_j_3

I do not believe there is such a thing as standard terms and Im not sure that I am fully understanding where you are coming from.

The purpose of my comments was to say that the BTL market is not as black and white as you had suggested in your post and that if the figures didnt initally fit then it might not be the end of the road for them

UK007BullDog

Well, if the buyer has to start looking at special deals like that thenits the first part of a very very risky deal which in the end could lead to repossession. All of a sudden in my area a lot of proeprty is for sale as there is too much BTL and the rents are pushed down. Some lenders wont even lend on this postcode anymore due to the amount of BTL available.

Add the fact that a newbie property investor goes down this route especially if the income is not that high and has to support the mortgage all it takes is a couple of rate rises or a property crash. And the baby falls out of the bath. Its quite simple. If you have to messs with the proven basic requirements you are asking for trouble. But that is my personal professional opinion and of course people can disagree with it. I would not advise to go down that route, however if the client is a professional or experienced landlord then yes, I would arrange it for them, as its not regulated its their risk, not mine.