Buy to let with no income

Svenisafool

Hi All,


In February I would like to remortgage my property to a 'buy to let'. It has a lot of equity in it and any rent (probably £1400pcm) would more than cover the mortgage. It is becoming difficult to afford the mortgage (currently £1300pcm).


The problem is that I have no income. I understand some mortgage companies have no minimum income requirement for those wanting 'buy to let' mortgages but they still require an income of sorts. Does anyone know of a solution?


One potential solution would be to ask someone to join me on the mortgage. Would I then have to put them on the title deeds? Would it matter if one person was employed and the other wasn't?


Thanks in advance for your help. I feel a bit snookered with this problem.

ACG

Speak to a broker. It could be possible to do it in your name alone.
But if it does need to be done in joint names then its very likely both names will need to be on the deeds.

kingstreet

If the current residential mortgage is £1,300 per month, your estimated rental income if true at £1,400 may be a problem.

BTL lenders want the rent to be 125% (or more) of the monthly mortgage interest, assuming perhaps 6% per annum.

So, £1,400 per month rent means a maximum mortgage of £224,000.

Your future plans may also be an issue. Where do you intend to live after doing the remortgage, as many lenders won't lend if you aren't buying another property as your main residence.

Wh05apk

kingstreet wrote: »

If the current residential mortgage is £1,300 per month, your estimated rental income if true at £1,400 may be a problem.

BTL lenders want the rent to be 125% (or more) of the monthly mortgage interest, assuming perhaps 6% per annum.

So, £1,400 per month rent means a maximum mortgage of £224,000.

Your future plans may also be an issue. Where do you intend to live after doing the remortgage, as many lenders won't lend if you aren't buying another property as your main residence.

I would assume the £1,300 is on a repayment basis? so if switched to a BTL basis on interest only it would probably fit.

boatman

I think they work on the basis that you will have to pay 20% tax on BTL rental income and another 5% to allow for rate rises.

Svenisafool

Hi All,


Thank you for your advice.


I can confirm that the £1300 is repayment mortgage. If it's any help the more precise figures are that the property is worth £450,000.


Also, kingstreet, I plan to move into my parents house to save money.

koexelek

Svenisafool wrote: »

Also, kingstreet, I plan to move into my parents house to save money.

It will be virtually impossible for you to convert the only property you own to a buy to let, if you have no earned income.
Lenders will assume you are going to continue to live there yourself ( even though you are not), and you are guilty until proven innocent in the current mortgage market.
Only real solution looks like getting a homeowner/earner to go on a mortgage with you.

Vectis

If you've got no income how are you paying £1300 on your current mortgage? Where's the money coming from?

Rent of £1400 with mortgage a payment of £1300 will leave you with £100 each month. What happens during the void periods when you don't have a tenant? An agent to manage the property will cost about 10% or £140 per month and there will also be other fees and costs if you go down that route too.

How will you pay for repairs and maintenance to the property? And what about LLs insurance, gas safety certificate etc?

I don't think you've really thought this through and there's huge gaps in what you are saying here.

Foxy-Stoat_3

Svenisafool wrote: »

Hi All,


In February I would like to remortgage my property to a 'buy to let'. It has a lot of equity in it and any rent (probably £1400pcm) would more than cover the mortgage. It is becoming difficult to afford the mortgage (currently £1300pcm). Put it up for sale now and try and sell it before February.


The problem is that I have no income. I understand some mortgage companies have no minimum income requirement for those wanting 'buy to let' mortgages but they still require an income of sorts. Does anyone know of a solution? You understand wrong. Only solution would be to get some income/job.


One potential solution would be to ask someone to join me on the mortgage. Would I then have to put them on the title deeds? Would it matter if one person was employed and the other wasn't? Good luck with this. The person would be on the Mortgage and Deeds and have an equal right to the property, equally liable for the mortgage, equally entitled to the rental income and also liable for the income tax, CGT and Landlord liabilities.


Thanks in advance for your help. I feel a bit snookered with this problem.

One very simple solution would be to sell the property.

NEXT !!

Svenisafool

Thanks koexelek. I too am beginning to think that is the only option.


Thank you Vectis for your response. Saving money is possible and I had done that so should a situation arise where I wasn't able to pay the mortgage I would not default. Unfortunately savings fall as time without income increases. It is at that point when I need to think about remortgaging the property so it is on a 'buy to let' basis and then renting it out. If I were to do that then the repayments would fall and rent would come in, and I wouldn't lose sleep. This is not being done on a whim.

Voyager2002

Svenisafool wrote: »

Hi All,


In February I would like to remortgage my property to a 'buy to let'. It has a lot of equity in it and any rent (probably £1400pcm) would more than cover the mortgage. It is becoming difficult to afford the mortgage (currently £1300pcm).


The problem is that I have no income. I understand some mortgage companies have no minimum income requirement for those wanting 'buy to let' mortgages but they still require an income of sorts. Does anyone know of a solution?


One potential solution would be to ask someone to join me on the mortgage. Would I then have to put them on the title deeds? Would it matter if one person was employed and the other wasn't?


Thanks in advance for your help. I feel a bit snookered with this problem.

You have not considered the simplest solution: ask your current lender for 'consent to let'. That can often be done without evidence of income. Of course, you would still face the problem that your mortgage payment plus costs would be more than your income...