Amount you can borrow based on rental income with buy to let mortgage

Legacy_user

I'm wanting to purchase houses using buy to let mortgages.
The only type of lenders who will lend to me are those who base the amount they'll lend you entirely on the rental income of the house in question. This is because I don't have any income as I'm newly self employed.
So could I just use a standard buy to let rental income calculator to work out the amount that I could borrow
So for example I'm looking at a typical 3 bedroom terraced with a rental income of maybe £850 can I just plug in the £850 into one of those standard online tools and get a rough idea of how much I'd be able to borrow?

Edi81

Why do you want to be a BTL landlord?
Have you read about all your duties?
What about empty periods?
Do you understand the tax changes that are coming in?
Stamp duty payable?

But to let isn’t the get rich it once was!

Thrugelmir

beanfarmer wrote: »

So for example I'm looking at a typical 3 bedroom terraced with a rental income of maybe £850 can I just plug in the £850 into one of those standard online tools and get a rough idea of how much I'd be able to borrow?

£850 wouldn't be the amount of cash you'd receive though. You need to cover the interest on the borrowed money plus property maintenance and other related costs of being a Landlord. Then there's tax to pay on the profit.

If it were as easy as you describe no one would do anything else but let property.

System

Thrugelmir wrote: »

£850 wouldn't be the amount of cash you'd receive though. You need to cover the interest on the borrowed money plus property maintenance and other related costs of being a Landlord. Then there's tax to pay on the profit.

If it were as easy as you describe no one would do anything else but let property.

No I don't think it's easy at all. The buy to let I'm thinking of is a house that I can let straight out without getting involved in building/refurbishment works so I would buy one in nice condition.

csgohan4

beanfarmer wrote: »

No I don't think it's easy at all. The buy to let I'm thinking of is a house that I can let straight out without getting involved in building/refurbishment works so I would buy one in nice condition.

'nice' properties don't come cheap generally. As with any business plan, you need to think of the overall overheads you will incur, from gas safety checks to new boilers and maintenance etc

Pixie5740

There isn't, as far as I know, a calculator available to do the kind of calculations you want. As a general rule of thumb for a BTL mortgage you will need a minimum of a 25% deposit and the rent should be 145% of the mortgage payments so for your £850pcm property the monthly mortgage payments shouldn't be any greater than £582. The monthly mortgage payment is dependent on the term, the rate and the type of mortgage (repayment or interest only) so there are a number of factors to consider. You could possibly build your own spreadsheet to do the calculations for you though.

Thrugelmir

beanfarmer wrote: »

No I don't think it's easy at all. The buy to let I'm thinking of is a house that I can let straight out without getting involved in building/refurbishment works so I would buy one in nice condition.

I'm not talking about refurbishment to bring a property up to scratch. As the landlord your are responsible for the maintenance issues that arise not the tenant. This a business that you'll be running. Not an ATM that is is going to dispense a guaranteed income stream. Have you considered that there maybe void periods and potentially tenant defaults in paying the rent as well.

wjchoihk

I dont understand why people try to teach you about things you did not ask for ;;
The amount you can get is annual gross rent ÷ 1.25 (if no or low taxable income) to get max interest payment and divide ot by stress rate (usually 5~5.5%) if they lend you against rental income only.
For rent use 5~10% conservative number as they down value these days.

* Please PM me which lender do that as I am also looking at this possibility.

Thrugelmir

wjchoihk wrote: »

I dont understand why people try to teach you about things you did not ask for ;;

What people do is up to them. Though isn't the purpose of this forum to help and educate. In order that people can make informed decisions. Plenty of people think that they've reinvented the wheel and struck gold.