Stuck In The Middle

kingstreet

Just to make me look a plank it appears to use 70%. Which would be odd if it has 80% LTV products.

Ah well. The rule still applies, even if the assumed loan to value percentage is different.

dkb

kingstreet wrote: »

It would normally take the lower of the maximum loan to value, or the maximum mortgage payment, based on the input rental income figure.

For example, a rental income figure of £500 equates to 130% of £384 monthly mortgage interest. If you assume the rate is 5.99%, that equates to a mortgage of £76,928.

In these circumstances, it uses the rental income as the determinant.

If you input £1,000 in the rent, it would probably then quote you the maximum loan to value, perhaps 80%? as that would be the lower of the two.

Try it. Put £1,000 in as the rent and £115,000 in as the property price. Does it return £92,000, 80% of the value?

No it says £80500. Is it broke?

Just found some more info which seems to suggest different rules apply for new customers as regards this rental income ruling.

Summary of Let To Buy Criteria
LBS Mortgage on Existing Property
[FONT=Arial,Arial][FONT=Arial,Arial]Where the applicant wishes to take advantage of the Society’s Let to Buy scheme and has an existing mortgage with Leeds Building Society, the following criteria apply:
• Rental income must equate to 125% of the mortgage payment calculated on an Interest Only basis. The borrower’s other income and liabilities should not be taken into consideration. Written proof is required.
• Written confirmation is required from a suitably qualified independent source that the proposed rental income is realistic.
• Maximum LTV is 70%.
• Minimum valuation is £50,000, £85,000 for all properties with a London postcode and £70,000 for properties in the South East.
[/FONT][/FONT]
Mortgage With Another Lender on Existing Property
[FONT=Arial,Arial][FONT=Arial,Arial]Where the applicant wishes to let out a property that is mortgaged by an another lender and is applying for mortgage with LBS, the following criteria apply:
• Rental income, from the property not mortgage by LBS, must equate to at least 100% of the mortgage payments. An assessment of the applicant's suitability will also be undertaken, and enquiries will be made of the applicants to assess suitability that may include proof of income and mortgage payments.
• Written confirmation is required from a suitably qualified independent source that the proposed rental income is realistic.
[/FONT][/FONT]

kingstreet

Let to buy is where you remortgage your current residence to let it to facilitate the purchase of a new main residence.

dkb

OK. Looks like i'm staying put for the time being.

kingstreet

I've just dug up the Leeds BTL criteria on the Intermediary site;-

Assessment of Income
• Rental income must equate to at least 125% of the mortgage payment (set as the BTL revert rate), calculated on an interest only basis. (For Leeds Building Society BTL applications only).
• Rental income is independently verified and provided by the Society’s valuers.

Loan to Value
Introduction
The Society will consider loans up to 80% of the purchase price or valuation

The BTL revert rate being 5.99%. So, they want the rental income to exceed 125% of the monthly mortgage interest assuming 5.99%.

That ends up well over the £500 you need.

You could look at other lenders with a lower requirement, if any.

dkb

The thing is, that mortgage came up on a search on Moneysupermarket. It asks for the house value, expected monthly rental and amount of deposit. You'd think if you didnt qualify based on the value to rental it would exclude it from the results wouldnt you, else why bother asking for it.

I've pretty much spent two days putting in various scenarios on an excel sheet to forecast savings over different periods over different deals based on that. What a waste of time if I dont even qualify bqased on something they've asked for, i've put in, and its ignored.

What joy

kingstreet

Well, as you might expect, I believe there's no substitute for a good broker.

dkb

kingstreet wrote: »

Well, as you might expect, I believe there's no substitute for a good broker.

I'm going to arrange an appt with one jsut to see whats out there.

dkb

I got in touch with the Leeds who confirm they would lend the required amount on a rental income of 540 a month subject to the valuation obviously. No further on then other than speak to a whole of market adviser.