Buy to Let

DarthAmz

Hi,

I just wanted to enquire whether my mum can get a buy-to-let mortgage.

Her credit score is really good, she has enough money for a deposit and to pay the stamp duty, and has been a homeowner for over 10 years now. However, the only issue is she does not earn £25000, which I found online is a mandatory requirement for a buy to let mortgage?

Cliveman_Pieman

Speak to a mortgage broker.

Why BTL anyway? If she's got a 5 figure deposit there are other investments available that don't have anywhere near as stringent conditions.

DarthAmz

BTL because its actually cheaper to do than if I buy a house as a first time buyer given that we live in West London and prices have increased considerably with the new cross rail coming.

Her deposit is actually six figures and we were looking to buy a second home and apart from BTL I don't see any other option to buying a house.

agrinnall

So this is not for her benefit, it's for yours?

Cliveman_Pieman

DarthAmz wrote: »

BTL because its actually cheaper to do than if I buy a house as a first time buyer given that we live in West London and prices have increased considerably with the new cross rail coming.

Her deposit is actually six figures and we were looking to buy a second home and apart from BTL I don't see any other option to buying a house.

Another very common condition to BTL is you can't rent to family y members. She would be better off giving you the money to buy your own house elsewhere.

DarthAmz

I totally agree but I'm only looking to acquire a property either to let it out by BTL or purchase another house and put our existing mortgage free property to let. Either way I will be living with my parents under the same roof.

DCFC79

Who gave your mum the really good score ?

The mortgage lender might not even use the same agency who gave your mum the really good score. Theres 2 other agencys, Call credit(Noddle) and Equifax(clearscore), you can get your free reports if you google the name in brackets

Credit scores are only seen by you and yourself only.

DarthAmz

We used noddle.

Cakeguts

I can't quite see what the plan is here but I suspect it is something like you and your mum have come up with what I would describe as "a good idea"?

While you are investigating if your mum can get a buy to let mortgage could you work out who is going to pay that mortgage if the tenants stop paying the rent?

You need to budget for not getting any rent for at least 6 months. This is based on how long it takes for a case to get to court to get possession of a property.

So basically if neither of you can afford to pay the buy to let mortgage on this property without any rent coming in this "good idea" isn't going to work. Don't forget the extra 3% stamp duty your mum will have to pay when she buys the buy to let.

Pixie5740

I'm slightly confused as to what it is you and your mother are trying to achieve. You're saying that purchasing the property as a BTL works out cheaper than you purchasing it as a FTB but then go on to say you will remain living under the same roof as your parents. If that the case what does the difference in buying as a FTB or a landlord have to do with the price of fish? Is this property being purchased with a view to you living in it one day?

If this is being done as an investment then properties in London generate poor rental yields. That means less money available to cover voids, insurance, maintenance, service charges, etc. As your mother is already a home owner she will have to pay the higher rate of SDLT when she purchases the BTL and given the high cost of properties in West London could mean that it's years before your mother is breaking even never mind making a profit.

Pixie5740

DarthAmz wrote: »

We used noddle.

Noddle don't lend money so whether they rate your mum as good, bad or indifferent is neither here not there. It's the credit history, that's history not score, that is important along with affordability and past dealings with the lender.

Not only do many BTL lenders state a minimum income of £25k for the landlord but also that the rent covers 125% of the mortgage payments and in some cases 145%.