Buy to let lending criteria for different lenders

SteeleyScott

Hello,

As the title suggests, im looking for guidance on which lenders have more favourable criteria for buy to let mortgages.

Specifically the part that determines how much they'll borrow relative to the monthly income. (edit, I believe this is sometimes abbreviated to ICR?)

Ill be looking for a new mortgage in June and based on my limited searching this morning: to do this on this particular property i'd have to hike the rent by £150-£200 pcm. Or put a good £20k into the mortgage, neither of which are my preference.

Can any of you recommend a lender that comparatively is one of the more relaxed ones with regards to above?

Scott

Thrugelmir

You'll need to go through a broker to find a BTL mortgage. Few lenders will deal direct. 

SteeleyScott

Thanks - just wanted to do a little leg-work myself before approaching a broker again. The criteria shouldn't be too hard to find. Just wanted to ask here what lenders people are gravitating towards with regards to the scenario laid out above? 

kingstreet

Depends on;-

chosen product (better on five year fix than two year fix)
basic rate taxpayer/higher rate taxpayer
loan to value
portfolio/non-portfolio/number of mortgaged BTLs
ltd co/non ltd co.
single occupancy/HMO
£ for £ remortgage/capital raising remortgage.

SteeleyScott

thanks King Street, as below in order of yours

- Happy to go 2 or 5 providing the early repayment charges are reasonabl
- higher rate tax payer
- LTV in the region of 60%
- < 3 in the portfolio
- not LTD
- Single occupancy

kingstreet

Sorry, I was setting out the differentiating factors. I wasn't looking for answers to do this for you.

SteeleyScott

I see.

In reflection of the answers above....As far as I can see most lenders i've read about this morning, relative to my circumstances, appear to have a criteria for the interest cover ratio to be 150%....do any places do less than that? 

 

ACG

Yes, but it is not just the 150% element you need to look at but also the rate... ie 150% at 5.5% means a lower rental income is needed than 150% at 6%. 

BTLs are not really my bag, they can be (and in your case will be a little more complex). Appreciate you want to do some of the leg work but a broker can have it all done in the time you are researching the basics. 

However, there are a few ways to maximum the income calculations to get away with lower rent:
5 year fixed rates are the easiest, but they will come with ERCs. 
Lenders with more favourable rental calculations (but these usually come with higher rates). 
Lenders who can top slice (use an element of your income to support a short fall), I think these also come with higher rates. 
A combination of the above. 

BTLs is quite a specialist part of the market now. We only do a handful a year where they are straightforward and only for existing customers so I am not trying to upsell here as I would not take this on. They can be a right pain and yours sounds like it will be. I personally think you should just find a broker and save yourself the headache. 

SteeleyScott

alright, thanks for the information. 

Appreciate I may be in the position where it's a difficult one, but I guess always the answer to that is capital. Which I have. Though the preference is to invest it elsewhere and not have to raise the rent on a long standing tenant.

I'll contact a broker, are there BTL broker specialists who folks are happy to recommend?

ACG

What you want to do can probably be done. You probably wont need to put in more money, but you might have to take a hit on the rates (or you may not). It all comes down to the details. 

Typically if you do not have the pick of the lenders, that usually means higher rates or bigger deposit/lower LTV. But that is not always the case. Most of what I do is adverse, sometimes we get it placed on the high street, other times we cant. This is similar to an extent albeit for different reasons. 

Hows that for sitting on the fence!

SteeleyScott

Informative yet not committal answer, I expected no less :-P 

thankyou!