BTL Mortgage Question

MoneySaverMick

Hi All,

Been on these forums a while but not much undertstanding of BTL mortgages.

My younger brother is coming towards the end of his 4 year fix rate, he is happy where he is at the moment however has 12k in savings which he is looking to invest in property.

His residential mortgage he has now is for a property he bought 4 years ago worth £90k (£81k mortgage) which he owes roughly £78k. He is going to re-mortgage this soon to a better rate.

What he is now enquiring about is buying another property to let, therefore my understanding is that you need atleast 20% LTV so with his £12k he's looking at propertys for £60k, were in North East so that can buy a 2 bed house in a modest area. At a very brief look, the mortgage could be over 20 years about £340 a month and he would be able to rent out a property in the area we looked at for easy £475 a month.

I'm just looking for advice and likely hood of him being able to get a 2nd morgage for BTL? I have no experience of BTL mortgages at all so thought I'd ask on here.

Is there anything he should worry about or change to put himself into a better position?

dimbo61

For many BTL mortgages you need 25% deposit and earn over £25,000
Your brother does not have a lot of equity in his home and would not be able to remortgage to release any equity.
He needs to build up savings as you will also face fees and legal costs to buy a BTL before you spend a penny on getting the property ready.

Thrugelmir

MoneySaverMick wrote: »

My younger brother is coming towards the end of his 4 year fix rate, he is happy where he is at the moment however has 12k in savings which he is looking to invest in property.

Perhaps his £12k would be be better "invested" improving his existing LTV. As this would at least provide a guaranteed return.

MoneySaverMick

Thank you both for the reply.

I've printed off this thread and sent this to him. After speaking on the phone to him over the bank holiday weekend, I think he is going to invest the majority of his savings into his current mortgage and start building them up again so maybe in another few years he will be in a much better position to get a BTL mortgage.

Thanks again and any further info will be much appreciated.