Mortgages multiples?

craigy1111

Hi all

This post is on behalf of a friend,

He currently has two mortgages, a residential mortgage of £95,000 (4% rate with payment of £550 based on 22 yeat term) and a small buy to let mortgage of £45,000 (interest only 3.29%, with rental income double his mortgage payment). These two mortgages are with the same lender.

His income is approximately £30000 so the multiple is just under 5 times. His net monthly income is round about £1800.

An opportunity arose when his friend is looking for a quick sale of his current house and is offering a purchase price of £60,000 when it's valued at £75,000, so with his 25% deposit hes looking for another buy to let mortgage of £45000 on interest only..

He approached his currently lender who advised based on all mortgages in the background the multiplier would be over 6x and it's not something they can consider, understandably.

The question is if he was to approach another bank, do they look at the lend only with themselves? Which based on this case is 1.5x multiplier, or do they look at the over all picture which is 6x income?

Do banks consider the fact they are interest only and buy to let, or do they just look at the balances and the over all multiplier? I said to him in the past (before 2008) it was all done differently, but is it possible to say what it is like now?

Thanks

mail2z

I though for BTL the mortgages is not based on income multiples but instead based on the deposit and rental yield.

kingstreet

I suggest he talks to a whole market broker, as the lending options on BTL are still mostly broker-based and as he becomes a "portfolio" landlord, the high street lenders will fall by the wayside.

There are lenders who will look at this.