[col type=”one-third”]
Our property investment expert is Jeni Browne, Sales Director at
Mortgages for Business
www.mortgagesforbusiness.co.uk
Tel: 0345 345 6788
[/col]
[col type=”two-third last”]
Question
Low deposit – do we qualify for a buy-to-let mortgage?
My partner and I are considering investing in the buy-to-let market, encouraged by the stamp duty holiday extension. We are looking at a flat which his valued at £200k but we only have £20k – at a massive push – to put down as a deposit.
Looking around it would seem the highest loan we could go for would require a 20% deposit. Are we missing anything? Are there any lenders/brokers which might be able to help us?
Answer
I’m afraid you will need a larger deposit, at least 20% plus spare for fees. Your options here are to look around for a lower value property, or perhaps raising more cash by remortgaging and releasing equity from your home?
If you have family members who could help put something towards the deposit, then that could be an option. Unfortunately, as you won’t be able to use a loan to make up your deposit, I’m afraid there aren’t any quick fixes here.
[hr style=”single”]
Question
Should I switch to a buy-to-let deal?
I am planning to move in with my partner and we are looking for a house to purchase together. We both own properties – he has a house which he is selling – and I have a flat, which we hope to rent out to make us an income.
I bought the flat in 2011 and have made a tidy sum on it which means I have about 80% equity. Is it worth me switching to a buy-to-let mortgage when we move, or just stick to the current residential mortgage I have in place. I am conscious a buy-to-let will be interest-only so I won’t be building more equity.
Answer
There are two options here: the first is, as you’ve said, change to a buy-to-let mortgage. However, before you do that, it might be worth asking your existing lender if they will grant permission to rent the property.
If they will, check whether this changes anything in terms of the mortgage rate.
In my experience, lenders are often happy to do this and keep your existing interest rate, which can be very economical! If not, speak to a buy to let mortgage broker who will be able to help.
[hr style=”single”]
Question
Switching to holiday let from buy-to-let
Due to a change in tenant circumstances I have decided to cash in on the thriving holiday let market and turn my private rented property into a holiday rental.
Currently I am on a buy-to-let interest-only mortgage which is three years into a five-year fixed deal. Do I need to switch to a holiday-let option or can I stick with the current deal until it expires?
Answer
The UK holiday let industry is absolutely booming at the moment, and will for a good while to come! So, a great decision on your part.
I would speak to your existing buy-to-let lender and find out if they would agree to holiday letting. If they won’t, you will need to move onto a holiday let inclusive mortgage.
Depending on how much extra profit you’re likely to make from the holiday let, it might still be worth paying any Early Redemption Charges (ERCs) you have on the buy-to-let and remortgaging now. Good luck!
[hr style=”single”]
Question
How much can I borrow?
Is there any way I can find out how much I am allowed to borrow on my buy-to-let mortgage. My husband and I have accumulated £89k in savings, investments etc and our joint annual income is £70k.
We are keen to find out what sort of mortgage we could get so we know how to refine our property search. Will we need to consider fees, stamp duty etc in all this?
Thanks for your advice!
Answer
The amount you can borrow for buy-to-let investment is determined by the loan-to-value (LTV) and affordability.
Lenders will lend up to 80% LTV, so if you were to put £70,000 down as a deposit, factoring in stamp duty tax, you’d be looking at property values of around £250,000 – £280,000.
Lenders calculate affordability using rental income. As a very rough guide, the loan amount divided by 180 will give you the monthly rental figure required, but it varies from lender to lender. My best suggestion is to speak to a broker or look at a buy to let affordability calculator online.
[hr style=”single”]
[/col]
