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
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.
Are you looking to purchase your first home but unsure where to begin? Here are some tips to get you started.
Choosing which fixed rate to go for has been a dilemma for many of our clients so far this year. There really isn’t a right or wrong answer, but below we will look into the pros and cons of a two-year and five-year to help you make the right decision for you.
Best UK Mortgage Rates this Week
14 days ago
Here are the lowest fixed mortgage rates of the week, available to first-time buyers, home movers, buy-to-let, and those remortgaging.
Call us for more information: 01628 507477 or email: team@mortgagerequired.com.
Stamp Duty Rush as Deadline Looms
15 days ago
According to Rightmove, a whopping 500,000 UK homebuyers are rushing to finalise their home purchase before the new Stamp Duty rules change in April.
The UK government is introducing new rules for Energy Performance Certificates (EPCs) that will impact landlords. Here's a summary of the key changes
Should I buy or rent in 2025?
22 days ago
Choosing to buy a house is one of the biggest decisions you are likely to make in your lifetime. There are many factors that influence a house purchase, these include: finances, housing market conditions, and mortgage rates.
ISAs: what are they, and which one is for me
25 days ago
Since being launched back in 1999 Individual Saving Accounts (ISAs) have been very popular for those wanting to put money into savings. There are four types of ISA, and the majority allow flexible saving and the ability to withdraw funds easily. There are financial penalties on certain products, these usually pay the most interest.
More information
Trusted by
