A non-homeowner getting a buy to let with 90% LTV?

tearose

Just wondering how likely this is and would appreciate the benefit of any advice.

I've seen a property that is for sale as a rental investment as it has tenants currently living there on an AST. It's in an area that I could see myself relocating to in 18 months to 5 years time, but I currently live and work in London. Is there any chance that I'd be able to get a buy to let mortgage with a 10% deposit and not being a homeowner? Or could I get a normal mortage with consent to let if I was planning on moving to the property for the latter half of the initial mortgage period?

I currently live in a shared house so outgoings are fairly low, have a secure and well paid job and the mortgage value would be slightly below 3 x annual wage before tax. I could easily afford monthly mortgage payments in additional to my personal outgoings if it came to it as it's less than I what I aim to save each month for a deposit anyway (based on 4.5% @ 20 years).

It's not that I love the property so much that I want to snap it up now, more that I quite like and think this might be a good investment.
thank you in advance.

HappyMJ

If you are buying it to live in straight away then your plan is fine. If you are buying it and keeping the tenants in place then you will need a buy to let mortgage and the rent usually must cover the interest and have some left over. The usual percentage is 125% rent over the cost of interest. Generally you will need a bigger deposit though. Once you move in you can remortgage onto a normal owner occupier mortgage....at which time your equity should be much bigger and you should get a better rate.

tearose

Thanks. The 125% is going to be a definite sticking point!

HappyMJ

tearose wrote: »

Thanks. The 125% is going to be a definite sticking point!

Do you know anyone that would be willing to go halves with you on this investment? If they provide some more deposit ..let's say another 10%...then the mortgage you get won't need to be as large..i.e 80% LTV. Would the rent cover the interest on that amount?

When you move in you can remortgage and buy them out.

tearose

That's a good suggestion, but I was thinking this might be the way I could afford to get on the property ladder a bit earlier and without any outside help, and be in a better position sooner in terms of equity in property. I was looking at trying to set the mortgage term as short as possible so that I'd be topping up the mortgage myself rather than expecting the mortage to cover over 100%.

Seems I might be better of buying a normal property that's vacant on ownership then getting a lodger, and using it as a weekend pad!

Thanks for your advice, anyway.

holly_hobby

Max LTV for a first time landlord is 75%, you'll need vacant possession, and at least been a prev home owner (although most BTL lenders want you to have a current resi mge).

So, based on all that, this is a complete no goer - even if you had 25% deposit.

Back to the drawing board unfortunately ....

Hope this helps

Holly x