Mortgage term on rental property help.

deano3

Hi,

In order to obtain a 95% mortgage on a second property to live in, the mortgage term of the house I rent out with consent has to be increased so that it covers rent ( or so I have been told by L&C) My question is does it have to cover rent on the rental agreement or the amount I receive after agent fee's, tax etc?

I do appreciate this may or may not depend on the lender.


Thankyou

lvm

Gross rent - before any deductions. But they are not required to just look at your lease. They can use a market-rate value which could be lower than your rental.

But you should, if possible, look at BTL mortgages for your current property as only interest is tax deductible. The amount of tax you pay will increase as the interest decreases.

Generally, the 125% rent vs mortgage is calculated on interest only.

CKhalvashi

My understanding is that with most lenders, 125% of interest is the figure used.

HSBC use 130% after agents fees, taking to approx 140%, so there are exceptions.

CK