[Finance] Buy to Let Mortgages

[Renegade1]

What does your contract say? I've used agents to find tenants before, but never paid the monthly commission as I think it's a rip-off.


Are you kidding? I've answered this a couple of times already, as have others.

Not kidding.

If I recall correctly I've read that it's linked to rental income.So if the rent covers the interest then that's it.Doesn't make sense.
If that's right then someone earning 20k for example could borrow 300K so long as the rent covered the interest
(Taking into account they have 25% deposit).

 

[Renegade1]

You've either not read, or not understood previous posts that have explained this.
Please look again at #59, #62, #66, #228, #231, #249, #254, #258, #263, #267 and again on #321

Did you search 321 post's to come up with that?

 

[Uncle Spielberg]

Not kidding.

If I recall correctly I've read that it's linked to rental income.So if the rent covers the interest then that's it.Doesn't make sense.
If that's right then someone earning 20k for example could borrow 300K so long as the rent covered the interest
(Taking into account they have 25% deposit).

Read the thread again it has been explained

 

[dazzer6666]

Not kidding.

If I recall correctly I've read that it's linked to rental income.So if the rent covers the interest then that's it.Doesn't make sense.
If that's right then someone earning 20k for example could borrow 300K so long as the rent covered the interest
(Taking into account they have 25% deposit).

They could.

Sent from my E5823 using Tapatalk

 

[Renegade1]

Lets put this to bed

You need a 20% deposit minimum ideally 25%
The loan is based on the rental income of the property unless you try Barclays, Clydesdale or Furness who do it on overall income and expenditure
It is based on 125% or 145% x 5.5 % rental yield usually depending on your tax rate
It is not treated the same as a residential mortagage, ie income multiples of income
most lenders ask for a 25 k or at least 20 k personal income unless you try someone like aldermore, bm solutions, new street or the mortgage works who have no minimum income
most lenders need you to be a residential mortgage holder bar a few

I hope this helps

As I said,if earnings don't come into it are you saying someone on 20K with a 25% deposit can borrow 300K
if the rent covers the interest?

 

[Renegade1]

They could.

Sent from my E5823 using Tapatalk

****.Really?!.I read it and understood it right but it seemed too good to be true
so that's why I was asking.

 

[Uncle Spielberg]

As I said,if earnings don't come into it are you saying someone on 20K with a 25% deposit can borrow 300K
if the rent covers the interest?

No it is based on the rental income stress tests based on basic or higher rate tax payers

 

[Since1982]

Just to possibly expand this thread.....I have one or two properties let out to tenants through a well known local Letting Agency.

I pay a commission each month on their rent of 8% plus VAT.

Some of my tenants have stayed with me for over 9 years, another 8 years and another 6 years. I like to think it is because I'm a reasonable Landlord and also the properties are kept in very good condition.

However, I am now more than a little fed up paying the Letting Agency the continual commission plus VAT....and additionally the £72 every 6/12 months to renew the contract. My tenants equally pay the Letting Agency £72 every 6/12 months for the contract renewal.

Two of my long standing tenants are reaching the end of their 6/12 month contracts and I have informed the Letting Agency that I no longer wish to continue paying commission plus VAT for what is now merely an exercise in paying rent money received diirect from the tenants into my bank account.

Their initial response has been that I cannot do this. Would this be correct....or will I have to issue a Notice to Quit in order to be able to have new tenants on an Introductory Fee basis only...? Of course, I wouldn't evict my existing tenants..they don't deserve that, but I am very very unhappy with the Letting Agents initial response.

Any proper advice would be welcome.

I never use a letting agent to manage the property, they are largely getting money for nothing. Tenant pays me the rent directly, I take a home emergency policy on the property so that the tenant has somebody to call other than me 24/7 if the boiler stops working or similar. I could take out a rent guarantee policy but I don’t think the risk is worth the cost. I have used a letting agent to find a tenant and do the credit checking for which their fees are an outrage.

 

[knocky1]

This is painfull.

 

[Renegade1]

This is painfull.

You could always simply not come on here.

 

[Renegade1]

No it is based on the rental income stress tests based on basic or higher rate tax payers

Stress tests regards needing £1250 rent if the interest is £1000?
how does the tax paying rate come into it?

 

[Triggaaar]

Not kidding.

If I recall correctly I've read that it's linked to rental income.So if the rent covers the interest then that's it.

Almost that's it. When I got my last one, the rent had to cover 125% of the mortgage cost. So if the mortgage cost £1k a month, the rent had to be £1,250. And there was no requirement for salary at the time.

Doesn't make sense.

Why? The rent covers the mortgage, what's the problem?

If that's right then someone earning 20k for example could borrow 300K so long as the rent covered the interest

I was earning nothing and borrowed 7 figures.

****.Really?!.I read it and understood it right but it seemed too good to be true
so that's why I was asking.

Yes, really.

 

[knocky1]

You could always simply not come on here.

I am waiting for you to say you haven't got a big enough deposit.

 

[Triggaaar]

Stress tests regards needing £1250 rent if the interest is £1000?
how does the tax paying rate come into it?

The tax paying rate is a new thing, presumably because of the new tax rules on counting mortgage costs against rental income. ie, if you are a high rate tax payer, you collect your rent, but then you have to pay tax from that as well as pay your mortgage, so they want a higher rent to mortgage cost ratio to make sure it's covered.

 

[Uncle Spielberg]

The problem we have here is that people are stating old buy to let mortgages and rules as I said it has changed beyond recognition since 2016 and the old criteria does not apply now

 

[Triggaaar]

The problem we have here is that people are stating old buy to let mortgages and rules as I said it has changed beyond recognition since 2016 and the old criteria does not apply now

Sorry.

Just trying to put it in plain English though, as he wasn't understanding your terminology.

 

[dazzer6666]

Sorry.

Just trying to put it in plain English though, as he wasn't understanding anything at all.

Corrected for you

 

[Uncle Spielberg]

Sorry.

Just trying to put it in plain English though, as he wasn't understanding your terminology.

I have explained it at least 15 times in this thread but people who got a buy to let mortgage before 2016 need to know the whole market and criteria have changed beyond recognition

 

[Triggaaar]

I have explained it at least 15 times in this thread

Everyone has.

but people who got a buy to let mortgage before 2016 need to know the whole market and criteria have changed beyond recognition

But he kept going back to the idea that surely you could only borrow 4 times the rental income or something, so even old info could get him into the right ballpark of what's possible.

And beyond recognition? I've read your posts and it doesn't seem that much different.

 

[Uncle Spielberg]

Everyone has.
But he kept going back to the idea that surely you could only borrow 4 times the rental income or something, so even old info could get him into the right ballpark of what's possible.

And beyond recognition? I've read your posts and it doesn't seem that much different.

It has in numerous ways