Best BTL rates!

56cheffy

I have £120000 MAX deposit to put on a property valued at £360000.

Are there any lenders that will lend this amount which by my sums is around 66% of value?

Most BTL that I can see only lend 60% LTV.

The rental income would be around £1250/£1500 pcm.

Looking possibly for a fixed term for just 2 years...then selling.

Thanks in advance.

kingstreet

The loan to value is fine, but the lower estimate of rental income will mean several lenders are unable to lend.

£1,250 to £1,500 a month is quite a range. Can't you narrow it down a bit and make it more accurate?

The best rates are based on a LTV of 60%, but you can borrow the lower of the LTV and the amount which meets your selected lender's rental income formula.

56cheffy

kingstreet

£1250 was a conservative estimate.......£1500 is more realistic.

56cheffy

Am I in the ballpark if I assume payments would currently be between £600/700 pcm borrowing £240k on an interest only basis?

kingstreet

If a lender requires rent to be equal to, or more than 125% of mortgage interest assuming a rate of 6%, a mortgage amount of £240,000 means the minimum rent has to be £1,500 per month.

If you want the best rates, you have two choices. Reduce your purchase price to £300,000, so your £120,000 deposit is 40% and the mortgage of £180,000 is 60%.

You would then need a rental income of £1,125.

Alternatively, keep your purchase price of £360,000, but increase your deposit to £144,000. This means your £216,000 mortgage is 60%, so you get the best rates and the rental income you need will be £1,350 per month, or less.

You need to consult an independent mortgage broker to ensure you get the best rates and the smartest way to piece the plan together.

kingstreet

56cheffy wrote: »

Am I in the ballpark if I assume payments would currently be between £600/700 pcm borrowing £240k on an interest only basis?

£240,000 on an interest-only basis would be;-

£600 per month on a two year fix at 3%

£800 per month on a three year fix at 4%

£1,000 per month on a five year fix at 5%.

These are just examples. I don't know the rates for a BTL mortgage at 66% LTV.

56cheffy

kingstreet

Many thanks for the helpful advice..it's very much appreciated and I will seek out an independent mortgage broker next week

amnblog

I don't know where you have been looking Cheffy?


Nearly all buy to let lenders have a 75% loan to value product.


On a two year fix the lowest rated product would mean payments of £478 per month and the highest £1,218.


Quite a range and in most cases you are probably looking at £500 to £800 per month.


The main difference between the costs of buy to let products and residential products are the product fees. Many of the buy to let mortgage products with the lower interest rates have sizeable product fees of up to 2.5%. It is therefore often a balancing act between low rate and lower fee. Since the fees are tax deductible, it can often be in the landlords interest to pay the higher fee.


There are many other complications on buy to let mortgages as lenders have differing views on:


The type of tenant
The type of tenancy
How much can be lent
Personal income requirements for the landlord
Other properties that the landlord owns
How much experience the landlord has


For this reason, you should engage a broker.


Many of the buy to let lenders do not take direct applications in any case so broker is always best.