Residential & Buy To Let Mortgage - maximum can borrow

andyp18

Hi There - I am looking for some advice as to how much I'm likely to be able to borrow between getting BOTH a buy to let and a residential mortgage. I'm struggling online to understand if there is a rule of thumb as to what the maximum I'm likely to be able to borrow is between the two.

I earn approx £110k (+£30k bonus) via full time employment, and have about £600k saved that I can put entirely towards buying a buy to let flat, as well as the deposit towards a house purchase.

Thanks.

silvercar

BTL mortgages are based on projected rental income rather than personal income. 

Residential mortgages are based on personal income, I’ve seen 4.5 times salary bandied about, depending on your deposit, credit history, secure employment, personal expenditure etc.

andyp18

silvercar said:

BTL mortgages are based on projected rental income rather than personal income. 

Residential mortgages are based on personal income, I’ve seen 4.5 times salary bandied about, depending on your deposit, credit history, secure employment, personal expenditure etc.

So you'd expect that I could get a residential mortgage of ~4.5 times my salary AND a BTL mortgage (albeit with a 25% deposit) as long as I can justify the monthly repayments within the approximate rental income? I assumed taking out a BTL mortgage would negatively impact how much I could borrow on a residential mortgage.
Thanks

silvercar

andyp18 said:

silvercar said:

BTL mortgages are based on projected rental income rather than personal income. 

Residential mortgages are based on personal income, I’ve seen 4.5 times salary bandied about, depending on your deposit, credit history, secure employment, personal expenditure etc.

So you'd expect that I could get a residential mortgage of ~4.5 times my salary AND a BTL mortgage (albeit with a 25% deposit) as long as I can justify the monthly repayments within the approximate rental income? I assumed taking out a BTL mortgage would negatively impact how much I could borrow on a residential mortgage.
Thanks

If the BTL washes its own hands so to speak, a lot of lenders will ignore it. It is rare to purchase both at the same time, so if the BTL already exists, you would show the tenancy agreement as proof of the income covering the mortgage plus other expenses. If the BTL is a future plan, then it isn’t necessary to discuss with the lender.

El_Torro

Are you planning to put the BTL into a Limited Company? Considering your high income that probably isn't a bad idea. 

As mentioned the BTL mortgage shouldn't affect your ability to borrow on a residential property too much. Generally speaking lenders will be happy to lend if the rent is 125% of the mortgage payments, or more. There may still be some affordability checks though, depending on the lender there may not be an exact science.

I was looking at getting a residential mortgage a few months ago and my Mortgage in Principle was more than 5 times my annual salary! I am quite a high earner though (not as high as you) and single with no dependents, which might be why I was able to borrow so much. 

kingstreet

As a higher rate taxpayer, you'll find "affordability" for a personal BTL will be based on rental cover of 145% with a rate depending on the selected product. For example;-

2Y Fix = higher of 5.5% or pay rate + 2% or;
5Y Fix = higher of 4.5% or pay rate + 1%.

The estimated rental income potential will determine the maximum loan. Let's say that's £1,000 per month.

On a two year fix, this would give a max loan of £110,345; while a five year fix would allow £150,470. These are based on the 5.5% and 4.5% rates.

Here's Virgin Money's calculator as the above is VM's "ICR".

On the residential mortgage, assuming a LTV of 75% or less, I'd expect upto 5.5 x income with most lenders accepting the BTL as at worst, self-financing based on the above calculations. There are lenders who will be happy with the BTL as long as the rent is the same, or higher than the monthly mortgage payment.

poseidon1

andyp18 said:

Hi There - I am looking for some advice as to how much I'm likely to be able to borrow between getting BOTH a buy to let and a residential mortgage. I'm struggling online to understand if there is a rule of thumb as to what the maximum I'm likely to be able to borrow is between the two.

I earn approx £110k (+£30k bonus) via full time employment, and have about £600k saved that I can put entirely towards buying a buy to let flat, as well as the deposit towards a house purchase.

Thanks.

Suggest you do some extensive homework on the miserable tax regime occasioned by section 24, which has rendered BTL on high borrowing higher rate tax payers  non profitable- see article below

https://www.axa.co.uk/landlord-insurance/guide-to-section-24-tax-changes/#:~:text=This change has particularly impacted,Final tax bill = £2,000

Unless you are planning to BTL via a limited company ( with its own host of issues including potential double CGT charges on property disposal and corporate liquidation), you are unlikely to make a meaningful annual income profit if BTL  property personally owned.

BTL landlords have been a bit of a cashcow for the treasury of late, and with a burgeoning deficit in the nation's finances, it is as well to be aware that further inroads into that sector cannot be discounted- see below

https://www.theguardian.com/money/2025/aug/28/uk-landlords-could-face-tax-from-rents

You may wish to put your BTL plans on ice, pending the results of the coming autumn budget.