How To Finance Buy To Let Mortgages
If you want to buy a property for rental income, you need a special buy-to-let mortgage.
When assessing your suitability, lenders look at how much you’ll get back in rent against the size of your mortgage payments.
There are few major things you need to keep in mind:
- Only 75% of the property’s value can be borrowed against. A few but to let lenders may go up to 80% and the odd one who are really specialised may go up to 85%, but this is very are rare. This means you need a good solid deposit, and cheaper rates only start if you have 40% to put down.
- The rental income has to cover 125% of the new mortgage payment.
- If this is a first buy to let property – most lenders want that client to be earning an average of £20000 – £25000
- If on the other hand you are an experienced landlord – i.e has owned a buy to let for at least 6 months – most lenders wont stipulate a minimum income.
- Most lenders stipulate that the maximum age at the end of the mortgage can not be over 75 years, however there are a handful of lenders that go beyond that age, and one even has no maximum age.
- Rates tend to be from 2.09% plus.
- The lenders that offer the lower rates tend to charge high lender fees for setting up the loan and these can be from 2% upwards. – these can be added to the mortgage.
- There are slightly higher rates and with lower lender fees.
SECURED LOAN ON A BUY TO LET
- We can lend up to 70% of a property value as a secured loan.
- These are ideal if the client requires extra monies but doesn’t want to touch the current mortgage. Maybe there is a redemption penalty or maybe the rate is so low and it can’t be matched.
- As a rule of thumb – the maximum that can be raised as a secured loan on a buy to let property is £75000.
The latest trend is to refurbish to let
This is mainly because rising property prices are pushing down the rental returns.