Anyone doing 100% BTL mortgages with no deposit?

Kaz2904

Hi there, I'm new to this section of the site having mainly lurked around MFW for the last several years . DH and I paid off the mortgage on our house a few days ago so now we're ready for the next stage.
We want to go for a BTL. I wonder if there are any companies who will consider the equity in our house towards the BTL mortgage. As yet, we only have about £8000 in savings but need to use some of that for works on our house and DH is reluctant to use the rest and deplete the savings.
To get to the point, will we have to just save up our 25% deposit before applying for a BTL? Or is there another way around this? We're 34 and 36 with no other debts and no defaults if that makes a difference.
TIA, Kaz and MrKaz.

opinions4u

Why did you pay off your existing mortgage if you needed the cash for a BTL deposit?

kingstreet

Raise the mortgage you need on your own home.

northerner999

After the past few years and tightening of belts by lenders to the point many people struggle to get a mortgage for their own home, you expect anyone to lend you 100% of the cost of another property just so you can then let it out for profit?

Not a chance. Save a deposit like everyone else has to.

dimbo61

Yes KAZ you can get a 100% loan to buy a rental property using the equity in your existing property if you know the right lenders and have a GOOD business plan.

Thrugelmir

Having done the hard work of repaying your mortgage. Why not just save up to buy the BTL investment property? Leveraging with debt merely increases the risk. It does not guarantee a higher return.

ado

First of all well done for paying off your own residential mortgage so quickly. Secondly you will need at least a 15% deposit for any BTL mortgage. I would imagine that in your position you could either save the money now that you are mortgage free or remortgage your own house for a modest amount then use that for the BTL deposit. A residential mortgage interest rate is going to be far lower than a BTL rate.

kingstreet

ado wrote: »

remortgage your own house for a modest amount then use that for the BTL deposit. A residential mortgage interest rate is going to be far lower than a BTL rate.

Why only raise the deposit?

If they have to remortgage their own home, why not simply raise all the money for the BTL that way, assuming enough equity? It makes no sense to remortgage just to raise a deposit then do a mortgage on the BTL as well.

Kaz2904

Thanks for the answers. I thought it might be the case. We will continue to save in order to gain a deposit- or depending what happens with the market, get enough to buy a house outright. Our thought was that if we got the mortgage at 100%, tennants could go in and would cover the interest part of the mortgage with their rent and we could use our saved monthly mortgage payment to start clearing the capital owed on the loan. Then start again with another when the first has been paid off.
We're quite risk averse so want to be absolutely sure that we can cover any mortgage payment with our own wages (yes I know one of us could lose our jobs at any given time).

Interested to know why you are against someone having a mortgage for a BTL property northerner999? Would you feel happier if we didn't borrow for a BTL and bought it outright? After all, mortgage companies only lend out money for profit.

marathonic

I agree with others, take the entire mortgage against your own home:

• You can still write the interest off agaisnt rental profits as you can prove to HMRC that the loan, although secured against your home, was taken for the rental property;
• Arrangment fees are lower for residential mortgages - and some have none;
• Interest Rates are lower on residential mortgages
• You'll be able to move very fast when you see a property as, ideally, the mortgage would already be approved - you could even consider auctions with risks involved mush lower than some auction buyers

Thrugelmir

marathonic wrote: »

[*]Interest Rates are lower on residential mortgages

The purpose of the equity withdrawl may prove to be stumbling block. Even if an offer was made. Unlikely to be at standard residential rates.