BTL Mortgage with lots of capital but no income.

longleggedhair

I have been looking at buying a property in order to rent out, the property is £700,000. I would be looking to put down £250,000 as a deposit and would need a BTL mortgage for £450,000.

However I currently have no personal income as I have been living off savings and not been in work. I understand BTL mortgages go off the rental income of the property, however what would a lenders view of me having no income?

Aside from that I am a homeowner and have an excellent credit history with very little debt.

Thanks

Soundgirlrocks

I'm not sure of the numbers you need to run but my first thought is if you have £250k available, would you not be better to look at BTL in that bracket so no mortgage needed (and no interest to pay)

You need to do the maths to see if its viable. My understanding for BTL mortgage need to show they are profitable (expected rent - minus costs & mortgage repayments) If it is at £700k then in theory I can't see you would get denied. A good friend of mine got a BTL on a very low self employed income (she did need a specialist broker but that was more because she didn't own another property)

haras_nosirrah

There are lenders who lend with no income other than rental however you would need to be a homeowner and possibly also an experienced landlord

Why not buy a smaller property for cash, rent it out for a bit and then remortgage and buy another property etc

Thrugelmir

longleggedhair wrote: »

I understand BTL mortgages go off the rental income of the property,

If the property generates no income what's your plan b?

AdrianC

A £450k mortgage? Let's put a wet-finger interest rate of 5% in to the MSE mortgage calculator - that's nearly £1,900/month in mortgage interest alone...

So how do you plan to cover that while paying for the place to be redecorated and refurbished after the tenant does a runner leaving it a right mess the day before he's due to be evicted for not paying rent?

Oh, and let's not even consider how long it'll take to start to break even after covering the £46k SDLT bill...

longleggedhair

AdrianC wrote: »

A £450k mortgage? Let's put a wet-finger interest rate of 5% in to the MSE mortgage calculator - that's nearly £1,900/month in mortgage interest alone...

So how do you plan to cover that while paying for the place to be redecorated and refurbished after the tenant does a runner leaving it a right mess the day before he's due to be evicted for not paying rent?

Oh, and let's not even consider how long it'll take to start to break even after covering the £46k SDLT bill...

It's a complex situation. In fact I've never particularly believed in buy to let as way to make money. However it is for a property I adore and have wanted for many years, however it's not practical for me to live in it for some years yet.

My (bonkers) idea was to buy the property, and rent it out until such a time as circumstances allowed me to move in. So I'm not particularly bothered about profit it's more about "holding" the property until such a time as circumstances allow me to move in.

AdrianC

I think you miss my point.

How are you planning on covering that £1,900/month for the months that the tenant didn't pay you any rent, and while the decorators/builders/carpet fitters are in, then the time and fees to find a new tenant? Oh, and the council tax while it's empty, obvs.

Do you have sufficient savings for the £46k SDLT on top of the £250k deposit, legal fees etc? How much will it leave you in reserve?

longleggedhair

AdrianC wrote: »

I think you miss my point.

How are you planning on covering that £1,900/month for the months that the tenant didn't pay you any rent, and while the decorators/builders/carpet fitters are in, then the time and fees to find a new tenant? Oh, and the council tax while it's empty, obvs.

Do you have sufficient savings for the £46k SDLT on top of the £250k deposit, legal fees etc? How much will it leave you in reserve?

Yes I appreciate and obviously had thought through those issues. I would have around £250,000 inreserve so I would easily be able to cover any months where no rent was received. As I said the purchase really isn't about making money it's about owning the property until such a time as I can move in, and obviously during that period it will be necessary to have a tenant to cover part of the cost and not leave the building empty.