BTL mortgage at 40% LTV

greensalad

Asking on behalf of my Mum.

My Mum has been self-employed for the last 20 years and struggling financially. She has not properly invested in a pension and is very worried about it all. Foolish I know.

My partner and I are moving up North and my Mum has decided she'd like to move to Yorkshire. She currently works for the police and is confident she can get a transfer and in fact the salary in her role is MORE in Yorkshire than in the SE.

Her house is worth around £300k down here (2 bed semi, London commutable town, hopefully sought after). We have been looking at properties where she wants to move around the £150k - £180k mark.

She would like to buy herself a new property, pay off her mortgage and use the leftover to invest in a BTL to help with her retirement.

My question is, what is the likelihood of a BTL with a 40% LTV? I know next to nothing about BTL so I don't know what the averages are. Is the required income level a bit less as they presume you will let it out and earn income from that? Is 40% LTV good in the BTL mortgage world? How does age affect BTL mortgages, she's 52. Will that change anything?

Kynthia

It's probably best she find a broker experienced in btl and go through all the options with them. Things will depend on her income, credit history, whether she's a home owner and how much the rent will be compared to the mortgage interest.

Mossfarr

Hi Greensalad,

You Mum will need to speak to a mortgage advisor as there are lots of options available. Your bank will usually offer this service free.

I am not a financial advisor but I do have two BTL mortgaged properties and am currently in the process of buying another.

In my experience of BTL mortgages, the most you will get is 75% loan to value - in other words you need a minimum of 25% deposit, they tend to be a bit more expensive than residential mortgages and arrangement fees are often higher too.
You have to demonstrate that you will be able to cover mortgage payments even when you do not have paying tenants.
You also need to take into account that you will be responsible for buildings insurance, landlord liability insurance, maintenance costs of the property and when your property is unoccupied you are responsible for paying the rates and utility bills.
You are also legally responsible for protecting any deposit you take (this alone is a minefield - you MUST research this thoroughly).
If you intend to have your lettings managed by an agent they usually charge a % of your rental income each month, they often charge one full months rent to find a tenant for you and admin fees for doing reference checks etc. They may also charge you another fee each time they renew the tenancy (possibly every six months).
You will also need to do a self assessment tax return each year so you need keep accounts for the income and any expenditure relating to your rental property.
If after all this you are still seriously considering it, I would advise that you join one of the Landlord Associations before you start. I joined the RLA and I found absolutely everything I needed to get started. Well worth the annual fee!

Good luck!!
mossfarr

Mossfarr

Hi greensalad,
I forgot to mention in my previous post I am 56 years old and retired so If I can get a mortgage I can't see any reason why your Mum shouldn't get one - but they will only lend until the age of 70 so (if your Mum is 52) the mortgage term would be a maximum of 18yrs.
mossfarr