buy to let mortgage criteria

kingstreet

There are a couple of lenders who will lend to those who do not own their own homes. They will be careful to ensure you aren't buying a BTL to live in when you wouldn't pass residential affordability rules, so they will check your personal income and check you could afford it as a residential as well as calculate rent = 125% of monthly mortgage interest, assuming c6%.

heytoki

kingstreet wrote: »

There are a couple of lenders who will lend to those who do not own their own homes. They will be careful to ensure you aren't buying a BTL to live in when you wouldn't pass residential affordability rules, so they will check your personal income and check you could afford it as a residential as well as calculate rent = 125% of monthly mortgage interest, assuming c6%.

Where i live, a one bedroom flat (same size as i could buy) can be rented out for £780 or £800. So that means, the mortgage would have to be around £600 pounds a month?

What is the meaning of c6%?

ACG

No.

It means if the rate was 6% and on interest only, it could not be anymore than £600.

kingstreet

It means circa, or "about" 6% per annum.

As ACG said, if the rent is £800, the monthly mortgage interest cannot be more than £640, which at 6% per annum means a maximum mortgage of £128,000.

Typically, the maximum loan to value will be 75%, lower if newbuild.

heytoki

kingstreet wrote: »

It means circa, or "about" 6% per annum.

As ACG said, if the rent is £800, the monthly mortgage interest cannot be more than £640, which at 6% per annum means a maximum mortgage of £128,000.

Typically, the maximum loan to value will be 75%, lower if newbuild.

Interesting to know that i could get a maximum mortgage of £128.000.

As a first buyer, i could get up to £115.000 as per my situation.
60K deposit, 24K salary per year.

At the moment i was looking at 170K properties. So that means i could go up for the 180K or even 185K?

lovinituk

heytoki wrote: »

If you have bad tenants, or the boiler breaks down, i believe that is just a matter of luck. Otherwise, nobody would do it.

Those things happening might be a matter of luck, but preparing for them if they do happen certainly isn't. You need to plan ahead for the worst case scenarios and have a decent reserve fund just in case your luck runs out.

amnblog

Speak to a broker Heytoki.

You have just told us two things in the text above that suggest you will be refused by the majority of the BTL lenders out there.

GMS

25k salary is the minimum for many lenders for BTL mortgages in addition to the rental calculations. You need to find a lender willing to accept that you are not trying to get round affordability rules and live in the property.

kingstreet

heytoki wrote: »

Interesting to know that i could get a maximum mortgage of £128.000.

As a first buyer, i could get up to £115.000 as per my situation.
60K deposit, 24K salary per year.

At the moment i was looking at 170K properties. So that means i could go up for the 180K or even 185K?

The maximum based on rental income calculation quoted is £128,000 but as I said, lenders are going to see you could not afford a residential at that level and think you are buying it via BTL then you'll live in it.

I suggest you appoint a broker and get proper tailored advice for your circumstances.

amnblog

kingstreet wrote: »

think you are buying it via BTL then you'll live in it.

Funny you should say that KS, so do I