1st Time Buy to Let

[Deleted User]

Hi,

Im hoping some of the experts can give me some advice.

Im a homeowner but looking to buy a 2nd property to rent out to my parents.

I have today spoken to London & Country & they have advised me that I should have no problem getting a BTL mortgage but I will need a 25% deposit as I will be a 1st time LL.

I am looking at properties at around 80k but currently only have 15k for a deposit.

Are there any lenders that would accept a lower LTV?

Thanks

Funk

kingstreet

There might be the odd 80% BTL product around, but whether they will lend that to a first-time landlord is another issue.

75% is correct, IMHO.

lonestarfan

funk_punk wrote: »

Hi,

Im hoping some of the experts can give me some advice.

Im a homeowner but looking to buy a 2nd property to rent out to my parents.

I have today spoken to London & Country & they have advised me that I should have no problem getting a BTL mortgage but I will need a 25% deposit as I will be a 1st time LL.

I am looking at properties at around 80k but currently only have 15k for a deposit.

Are there any lenders that would accept a lower LTV?

Thanks

Funk

If L&c have said you could do this then is it because you earn enough and your income multiples equal 2 mortgages ? i ask because I thought it has to be a regulated BTL if you are renting to family members from what I understand I've read on these boards. Can you clarify as I'd find that helpful. Thx.

kingstreet

I must confess I missed the parents bit and lonestarfan is quite correct. This is a regulated product and your pool of potential lenders will be smaller as a consequence.

I suspect 75% will now be the absolute maximum possible.

[Deleted User]

How would the mortgage provider know I'm renting to family. I may rent it out through an agent so not 100% decided.

[Deleted User]

Thanks for the replies btw

holly_hobby

Yep, if the property is to be rented to family (or more than 40% will be occupied by relatives) then a regulated BTL product is reqd.

The difference between a regulated BTL to standard non-regulated BTL lending (non regulated as its commercial borrowing), is that you will have a smaller pool of lenders whom are happy to play in regulated waters, with the mge being assessed under 2nd proprety regs, with your earned income being the defining affordability tool, not rental income (as with traditional/standard non-regulated BTLs).

75% is the typical max LTV for a first time landlord, esp on regulated lending.

In a nutshell, if you know at outset that you will be renting to your parents - then you must seek a regulated product, otherwise its technically mortgage fraud (eg mis-representation for financial gain).

If at outset you however have every intention of renting to Joe Public, then you don't need to seek a regulated BTL ....

If things later change and parents become tenants, well whether you declare this to the lender at that time is up to you ... but if YOU move into the property as your primary residence you should (must) disclose this to the lender (where the mge will re re-assessed on residential terms).

If parents will be seeking HB re their rent - then a fair market rent must be charged, with the tenancy operated under a traditional landlord/tenant relationship basis, inc AST, which will be duly assessed and verified by DWP as per their regs.

With regards to the BTL itself, I am assuming you are aware of ASTs, reporting of rental income, landlord responsibilities, retaining cost/ records for Income or Capital Gains Tax deduction, etc, etc, blah, blah, blah ... !! If not, shout and we'll give some guidance.

Seeking either a regulated or non-regulated BTL - best and fastest solution is via a whole of market broker, through whom you'll have access to all products/lenders (inc intermediary only deals).

Hope this helps

Holly x

[Deleted User]

Thank you Holly. Still early days so information gathering at the moment. That's very helpful & informative.