Buy to Let Mortgages

NOVAMET21

Hi
Can any mortgage advisors or people who have buy to let properties give an insight on how it works please?

I have heard people buying properties to rent out every 4 years and owning multiple properties throughout their lifetime. I was wondering how this can be done. Obviously, in the past house prices were much lower than these days so that could play a huge role.

I'm just trying to understand how people are doing it.

When it comes to mortgage affordability, do the lender takes into account of the what if the property is not occupied hence the landlord not receiving any income rental?

When it comes to applying for the buy to let mortgage, I take it the minimum deposit require is 25% and in terms of how much will the lender lend, does this depend on the estimated rental income only? Does the lender check any other things?

Kind regards
AG

kingstreet

Your assumptions are a couple of years out of date, sorry.

The PRA rules require lenders to be more stringent in their checks on lenders so expect;-

20% deposit or more
rent to be at least 145% of monthly mortgage interest at 5%pa*
personal income checks
analysis of other BTL ownership ("portfolio landlord" status).

*There are lots of variables around this, such as selection of short-term fixed rate, or longer-term. Basic rate or higher rate taxpayer impacts. There are lenders who will take into account surplus personal income if the rental income calculation doesn't stack up.

It is a lot more involved and less straightforward now we have regulation.

Then, you have the Government limiting the "tax relief" on the mortgage interest and second property SDLT 3% surcharge.

Get broker, legal and accountancy tax advice.

amnblog

People used to build portofolios in previous years by remortgaging to raise extra funds as property prices continued to rise.

That was in a market where prices were rising 5% of more, mortgage interest could be fully offset against income for tax purposes, there was less regulation on landlords.

In today's market, once you are borrowing on your 4th property the Lender is all over you like a rash gathering supporting information.

dimbo61

So many variables to take into account
Your job, job security, Income, savings, type of property you already own and equity in that property.
Are you married ? You could set up a partnership and buy a property as tenants in common say 75/25 or 90/10 so the lower rate tax payer earns the Lion's share of the rental income IF your partner is a lower rate tax payer ??
Have you got experience in being a landlord or property developers ?
The way to increase the value of a property is to Add value which means adding floor space.
Under permitted development you can build a side extension front to back up to half the width of the existing property IF you have the space to the side of the property.
You can also build a rear extension up to 6 meters if a semi and 8 meters if detached.
Yield is also very important in running a successful business.