Borrowing money for a ‘buy to let’ investment is different to borrowing for your own home. The interest rate is usually higher in comparison and the deposit required is usually between 20% and 40% of the property’s value.
In addition to the LTV (Loan to Value) Ratio, most lenders will also set a minimum ‘rent cover’ which is generally set at 125% of the monthly mortgage repayments. This means that for a mortgage repayment of £500 you may need to demonstrate a rental income of £625 per month.
Whereas buy to let mortgages were once excluded from legislation relating to stress testing, this is changing and together with what many regard as punitive increases in SDLT (Stamp Duty Land Tax), exclusion from recent reductions in the rate of Capital Gains Tax and the phased elimination of Mortgage Interest Tax Relief, many aspiring Landlords are wise to reconsider their options.
Of course, cash buyers will not have to worry about Loan to Value ratios or the loss of mortgage interest relief. Perhaps remortgaging one’s own own and using the cash elsewhere is being considered by those with significant equity?
For more information, contact us on 01628 507477.
Download our Free First Time Buyers Guide
Recent posts
Skipton Building Society launches ‘Delayed Start’ mortgage meaning first time buyers won’t be required to make repayments for the first three months.
According to a survey by Skipton, first time buyers who bought their home in the last five years found that in the first three months of living there, they were spending upwards of £30,000.
Gardening Tips for Beginners
5 days ago
If you have recently moved into a property with a garden that requires a little TLC, or you’d like to get on top of your current green space, check out our tips.
The Family-Backed Mortgage from NatWest
8 days ago
High street lender, NatWest, have launched a new product to help first-time buyers purchase a property with assistance from a family member or friend to get them on the property ladder sooner.
‘Buy Now, Pay Later’ (BNPL) schemes, such as ‘Klarna’ are short-term loans that allow shoppers to make a purchase, but delay paying for it for an agreed amount of time.
Klarna is one of the most popular BNPL services with 18 million customers in the UK alone, and offers interest-free payment options which is appealing to shoppers. However, does it affect a mortgage application?
Buy to Let mortgages: what's happening?
14 days ago
We look at how to get the best Buy to Let mortgage rate, what's in store going forward, and options as a landlord with increasing costs.
UK mortgage rates following Trump’s Tariffs
23 days ago
Throughout this past week, lenders have continued to reduce their mortgage rates giving borrowers in the UK some welcome news following the change in global tariffs under US President, Donald Trump.
Effective ways to relieve stress
23 days ago
Did you know that buying a house, or relocating is in the top 10 most stressful life events?
Stress of course is an unavoidable part of life and there are many reasons why people experience stress, not just buying a house!
There are lots of effective ways to manage and reduce stress, check out our tips to help you.
With the stamp duty relief ending in England and Northern Ireland, we have listed the top 10 cheapest areas for first-time buyers as published by Rightmove.
More information
Trusted by
