Buy-to-let / buy mortgage advise

wacko2k

I'm looking for some advise about whether the following proposition would be possible from a lending prospective.

My partner and I both have our own mortgaged properties (with 25% equity).

We are considering buying a house together and would prefer to keep both our current properties switching them to a buy-to-let mortgages.

Our existing properties are both valued at £100k and our third property (on a residential mortgage) would be around £250k.

Our combined income is £70k.

Based on a 10% deposit for the third proper our income to lending ratio would be 5.4, although two properties would be on buy-to-let.

Would the third property be possible or are we aiming too high?

ACG

Ignore the income to lending ratio. BTLs are excluded from the news last week.

Your aware at 75% LTV on the future BTLs you may struggle to withdraw any equity from them? Most BTL mortgages go to 75% LTV, the odd one goes to 80% but rates jump up.

Another issue you may find is that 90% LTV with BTLs in the background, not all residential lenders are going to do it.

Getting the BTLs should be relatively straight forward all things being equal, but I would still suggest speaking to a broker as there are a lot of BTL lenders who only deal with brokers.

For the residential, I would probably also suggest speaking to a broker as you could find you you need to spend a lot of time checking lenders criteria, where as a broker can probably do it in half the time... although this is one you could do yourself if you are prepared to do the donkey work so to speak.

Senior_Paper_Monitor

As ACG says - also first time landlord issues, let to buy issues and possibly reason for loan (if increasing mortgage) which remove a number of lenders from the options.


Not impossible but a fair bit of 'legwork' to put the package together without falling over criteria (and getting best rates available).

Morgage_Confused

Wouldent it be easier to just request consent to let first on your residential properties....rather than full buy to let mortgages?

Senior_Paper_Monitor

Easier yes, but not necessarily the best answer and may:


1) not be an acceptable scenario for the old lender


2) present problems in switching to Interest Only to make figures fit


plus a number of other potential issues that make up the necessary 'legwork'.

ACG

CTL is usually also a temporary fix. So sooner or later you would need to go to a BTL mortgage.

wacko2k

Thanks for all the very informative replies.

We wouldn't be planning to release any equity from the existing properties. At least not anything that would increase LTV over 75%.

A couple of other questions spring to mind. Would bonuses be taken into account for lending (if evidence from previous years could be given)?

Also would there be any need to move the two existing properties into joint ownership?

Senior_Paper_Monitor

1) Yes -depending upon nature of bonus and lender involved (I assume you refer to the residential mortgage)


2) Depends upon a variety of factors


..... more legwork

amnblog

This is all possible in theory.


You need to get some advice from a decent mortgage broker.


You will crash and burn for sure if you try to organise this one on your own.

Thrugelmir

wacko2k wrote: »

Would the third property be possible or are we aiming too high?

Have you considered the potential risks of servicing £375k of debt and having property assets of £450k?

Overleveraging raises the stakes. Interest rates rises and property price falls would paint a far less rosy picture.