How strict is LTV on mortgage deals?

Supadupa

Hi,

I plan to move my residential mortgage to buy to let when my current deal expires in the next couple of months. There is a good rate available with my current lender up to 75% loan to value. When my current deal expires my loan to value will be 75.377%. Am I likely to qualify for it or will the 0.377% mean I can't get it?

I could pay the difference but I think I'd actually be cheaper to go onto the SVR for a couple months and delay my tenants moving in.

Does anyone know how strict the ltv ratio is normally?

Thanks

kingstreet

It's 75% exactly, or under.

Any tenths above put you into the next band.

Why don't you ask your current lender for consent to let, then sit on SVR for longer, if you can?

dimbo61

Get the LTV down to the 75% you need and get your tenants in asap.
this is a business you are now running and an empty property is costing you money.

Wh05apk

The property valuation will also be the lenders valuation, which will likely differ from both yours, and an estate agents valuation, so realistically I would not be surprised if the downvalue your property and you end up at about 78-80%

Supadupa

Thanks for your replies. If I go onto the SVR then they add another 1% to the rate so my rental income would not then cover the interest so I don't think I'd qualify.

I'm going by the valuation that lender gave me with the original mortgage deal and I'm hoping it hasn't gone down!

I suppose there really only is one answer then as I'd rather get the tenants in sooner rather than later.

Thrugelmir

Supadupa wrote: »

Thanks for your replies. If I go onto the SVR then they add another 1% to the rate so my rental income would not then cover the interest so I don't think I'd qualify.

Then you'll find a BTL mortgage even less profitable.

You'd be wise to improve the LTV before considering the letting route.

Supadupa

Thanks for that, I've been reading the criteria again. Can someone demystify the following for me please-: 'Minimum rental income required is 125% of interest only, based on the pay rate or reference rate (currently 5%) whichever is higher.'

Does this mean that I need to do my calculations as if the interest rate is 5% rather than the actual rate and then my rental income needs to be 125% of that?

E.g. if I was borrowing £100k at a rate of 5% over 20 years then the monthly interest payment would be £416 so the rental income would need to be £520 per month (£416 x 125%). Is this correct?

Thrugelmir

Supadupa wrote: »

E.g. if I was borrowing £100k at a rate of 5% over 20 years then the monthly interest payment would be £416 so the rental income would need to be £520 per month (£416 x 125%). Is this correct?

Correct.

Some lenders use higher rates than 5%.

The rental value will be assessed by the property surveyor.

Supadupa

And presumably getting consent to let on a residential mortgage would have the same criteria on rental income (I could renew the residential mortgage, convert it to consent to let, have ltv up to 80% and a very similar interest rate to the buy to let option) but I think the maximum rental I could charge is my stumbling block if it needs to be based on 5% (or higher).