Interest only mortgage..is the affordability criteria lower?

freeisgood

Sorry I can't seem to find the answers in the forum search.

If you get an interest only mortgage, I know the repayments are lower obviously...does this mean lenders would allow you to borrow more (with a plan to pay back the balance)


Is the multiple of salary still the same?

Thanks

glosoli

Not at all, if anything it is higher as they often have minimum income amounts, loan amounts or house value amounts.

In our place when we credit score a interest only application, the affordability is determined on a capital and interest basis.

ACG

Identical at best, but they would want evidence of how you plan on paying it back/large deposit/large income.

Interest only will not allow you to lend more.

freeisgood

Ah, wow, that's not what I expected. so even though the repayments would be very small, they would not lend it to me in the first place?


I am thinking 100k for property 120k with 10-12 year mortgage, buy to let. 20k deposit already, and a plan for the final balance.( the balance would be available in 10 yrs) income is 18k

flashg67

Often a £25k minimum earnings limit for BTL mortgages and a 25% deposit, but interest only is (usually) available still on BTL

freeisgood

Thanks for all your help

ACG

BTL is slightly different to residential.
There are no income multiples with BTLs, but there may be minimum income requirements and rental income requirements.