BTL Remortgage

shads1973

Hi people,

Little forward planning, just looking for some clarification

Run my own ltd company, in the past have taken dividends etc to earn just below the higher tax band threshold. With new 7.5% tax on dividends and no urgent need for the additional money, am looking to remain on a basic wage and earn around 10k for the tax year 2016/17.

My question is in May 2017 my existing 5 year fixed rate BTL comes to an end so will possibly look for a new deal. Will the 10k annual income hamper my options? I've read a few sites which talks about 125% of the rental income as opposed to mentioning the affordibilty side as with a residential mortgage?

The property itself at present has an 84k mortgage on it with a £650 monthly rent (which hasn't been increased in some 2 1/2 years). It's recently been valued at 160k.

The tenant has been on a monthly rolling contract for the past 18 months, so I assume I'd have to get a new tenancy agreement put in place prior to any remortgage?

Obviously may is some time off, but I wanted to make sure everything was in order well in advance (and the fact my ltd company tax year ends in Aug so if I needed to take dividends I'd do it before then)

ACG

When looking at BTLs there are 4 main bits of criteria most lenders have. The less of these you meet, the less lenders you will have to choose from:
Minimum age 25.
Minimum income £20-25,000.
Rental calculation of 125% @ ~6% (based on interest only)
Existing homeowner

If the only issue is your income being £10k, there should be enough options for you to get a decent enough rate.

shads1973

That's great news. Any idea how much of the market isn't available by only going in at 10k? We talking marginal interest rate differences? And the LTV products affected by this criteria?

amnblog

About 90% of the market has minimum personal income criteria.

ACG

At that LTV, I think you will have decent enough options to you.
Chances are it will not be the best buys but its unlikely to be more than 4%.

BTLs are not massively my thing, I tend to do a few for existing clients and the odd one here and there, so I am not 100% on where the market is in terms of rates at the minute. I usually have to start my resarch from scratch but I think you should be fine.

shads1973

amnblog wrote: »

About 90% of the market has minimum personal income criteria.

That's quite a lot. That doesn't equate to the remaining 10% being the worse BTL mortgage prodcuts available?

shads1973

ACG wrote: »

At that LTV, I think you will have decent enough options to you.
Chances are it will not be the best buys but its unlikely to be more than 4%.

BTLs are not massively my thing, I tend to do a few for existing clients and the odd one here and there, so I am not 100% on where the market is in terms of rates at the minute. I usually have to start my resarch from scratch but I think you should be fine.

The 5 year fixed product with Skipton is at 4.29%. So anything sub 4% would be an improvement anyway if I manage to achieve that

ACG

I like Skipton but they have a minimum income of £25,000 I think. Although they are one of the lenders I look at for people who are not homeowners. You only need to own a property with them but it can be a BTL.

shads1973

ACG wrote: »

I like Skipton but they have a minimum income of £25,000 I think. Although they are one of the lenders I look at for people who are not homeowners. You only need to own a property with them but it can be a BTL.

They definitely had a 25k minimum income at the time I took the product, as it was the best on the market but based on that criteria.

Not sure if I can just approach them direct having a product already with them or best to go via a broker? (which I think I'll have to anyway if indeed an income of 10k only leaves 10% of the market available)

Thrugelmir

BTL lenders are moving towards 145% from 125%. Highly likely that next year that this will become the norm. At the moment only issued guidance rather than regulatory.

shads1973

Thrugelmir wrote: »

BTL lenders are moving towards 145% from 125%. Highly likely that next year that this will become the norm. At the moment only issued guidance rather than regulatory.

Hmm more food for thought. Though I think on my sums even 145% shouldn't be a problem?