buy to let question:

Seanymph

I'd rather look silly on here than anywhere else, so here goes:

I would like to buy a property to let out.

I currently earn around 20k a year, and own my own home outright. I bought it for £215,000 a couple of years ago - it will be valued around there or possibly slightly higher now, but I haven't extended or anything so it's a good guide.

Can I borrow on mine to deposit on the buy to let? Or do I have to save up the money?

How much percent wise would I need on a buy to let for the deposit.

Would my wages limit my borrowing?

And any other really basic questions you can think of answering that I haven't thought to ask.

Thank you so much.

Lovelyjoolz

Yes you can. Mortgage Works are quite happy to do this. Others probably are too.

You'll need at least 25% deposit on the BTL purchase.

Last time I sat down with my broker mortgage lenders were more concerned that the rental income (i.e. return on investment) than my salary. Mortgage Works will lend on BTL to customers up to 90 years of age, so I assume from that they don't give two hoots if you are earning or not, just the the rent will cover the mortgage and the deposit it substantial enough.

This was two years ago mind, so things may have changed.

Seanymph

So, because I'm getting a hold of this - the yes is 'yes you can borrow against yours', where presumably my salary WILL count.

That will be a deposit against a BTL where my salary won't matter as long as the amount I'm borrowing is comfortable within the anticipated rental return.

Is that right?

Thankyou.

Lovelyjoolz

Read this thread before you consider becoming a landlord:
http://forums.moneysavingexpert.com/showpost.php?p=41160642&postcount=12

Realise that you will be running a business and you must consider it as such.

Don't forget to register with HMRC and do your tax returns.

Lovelyjoolz

Seanymph wrote: »

So, because I'm getting a hold of this - the yes is 'yes you can borrow against yours', where presumably my salary WILL count.

It depends on how much you want to borrow. How much are the properties you are thinking of buying?

Seanymph

Thanks Joolz

I had four flats before - but there were a conversion on part of the property I lived in, not a separate building. I then bought a shop and lived in part of that property for seven and a half years and ran a business. And I am in accounts/local government.

I am registered for self assessment and do a return every year.

So although that's absolutely useful advice, I am not worried about the tax/capital gains/administrative side.

It's the actual achieving of it that I need to understand at the moment.

I suspect the properties I will be interested in will be around £120 - 150k.

Lovelyjoolz

OK, so if you put down a 25% deposit you're looking to release funds from your home of 30k-37.5k. This is only 1.5x your salary, so I can't see any lender having a problem with it.

Speak with a few lenders who offer BTL mortgages and I'm sure you'll have plenty of options out there.

Make sure you have a decent contingency fund though. Boilers have a horrible habit of packing up just when you don't want them to!

kingstreet

Raise more on the residential. If you are going to do this, you might as well get a 60% mortgage on the let and get the best rates.

amnblog

Your personal earnings will not be acceptable with a number of lenders for buy to let lending on the investment property.

Therefore get some advice from a broker at outset.

Seanymph

Thanks amnblog - so my salary DOES count on the buy to let borrowing?

Annisele

Salary doesn't exactly count for the BTL - it's just that some lenders have a minimum salary of £25k or so. Once you've hit the minimum, they don't (much) care about exactly how much you're earning, but they plain won't lend at all if you don't hit their minimum.