Buy to Let Help!

d_jonesm2007

Hi Everyone,

Please excuse me if the help I want is a little primative, this is my first time posting here, so I would appreciate any help you guys can offer.

I've recently put in an offer for a house that I like and its been accepted. I have a solicitor but at present, have no mortgage.

I propose to do a buy-to-let mortgage and am currently shopping around, but am having a difficult time trying to choose a deal. The house is £140K but I'm trying to figure out how much of a deposit to put down, so that the monthly payments are covered by the rent, but also so that I dont end up having to pay too much tax back.

My predicted rent is a minimum of £550 a month, which I know is quite low, but thats the average, I doubt it will go much higher than this, maybe £575. I have rung around a few letting agents but without any of them seeing it, they say a minimum of £550.

Could anyone tell me where I could find a decent deal? I've looked around and I understand that most lenders only lend 85% for buy-to-lets, but is it true that they base the amount I can borrow on how much rent I can predict? If this is true, why do they ask how much my current salary is?

Anyone's help would be greatly received.

Thanks,

David.

clutton_2

Yes BTL deals almost always depend on the relationship between the rent and the mortgage repayments. Historically lenders wanted you to get 30% (known as 130% coverage) more rent than the mortgage payments. This has become increasingly more difficult to achieve as property prices have increased but rents have not kept in line. Some lenders will offer you 125% coverage and occasionally 10% coverage - BUT - how will you pay for your CORGI certificate, repairs, voids, insurances etc if you have no cashflow?

they want to know how much you earn so that they can be sure you CAN pay for these costs.

Most lenders want you to put down 15% deposit.

the higher the deposit you put down, the better terms you will be offered - but then, you need to ask - will i earn more interest in the bank without all the hassle? Only interest repayments (not capital) are off-settable against BTL profit - plus all the other business expenses which you will incur.

Your figures sound to me as if you will have a lot of difficulty getting funds for this property.

Gorgeous_George

£550 for a £140,000 house outlay. I don't know what your motive is for this 'investment' but my trollometer is in the red.



GG

d_jonesm2007

Would it make any difference if I were to put down a 25% or 30% deposit?

The other thing I have noticed is that most lenders charge a 2.5% application fee. Is this normal? This sounds quite a lot!

Would you happen to know of any deals? I understand that what happend to Northern Rock has had an effect of the rates as well...

clutton_2

if you are insistent on doing this - find a whole market broker who can assess thousands of deals for you.

Running_Horse

stable

horse

door

bolted

Running_Horse

band

missed

wagon

Running_Horse

late

party

arrived

dolce_vita

boat

the

missed

Griptool

born

one

minute

every


:rotfl:

epz_2

you do realise you are going to be paying £150 a month(1) plus maintenance, voids etc to buy a potentially declining asset

thought about putting you cash on a horse race, less long term danger and possibly a higher chance of success.

(1) 140k @ 6% interest only is £700.