[Finance] Buy to Let Mortgages

[Renegade1]

Sorry.

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

Understood it is based on rental income and not salary however wanted to double check because it seemed too good to be true.
Didn't understand how the tax rate came into it.

When things are fully explained I can understand it.

Thanks to everyone for their very helpful post's I hope/assume there are also others on here who have gained from the info posted.
That's the idea.

 

[Renegade1]

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

You will be waiting a long time.

Sorry.

 

[Shropshire Seagull]

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?

Listen, think of it this way - all lenders want to know on any loan is, can the borrower(s) afford to repay, simple as that. Many lenders had their fingers burnt a few years back with sub-prime lending so now they [most] are more cautious.

For a residential loan [e.g. on your own house] affordability is measured against the income of the occupants / borrowers - i.e. where is the money coming from for the mortgage payments - so the amount you can borrow is tied to this [income].

For a BTL loan, the repayments are coming from the tenant's rent, not the owners salary [assuming tenant occupancy] - so the amount you can borrow is tied to the rental value [as set by the surveyor, not you].

Hopefully, this finally concludes the "how much can I borrow for a BTL mortgage" [in it's most basic terms]

 

[Shropshire Seagull]

Dubai

Oh dear ! Firstly, to the best of my knowledge, Dubai is a city not a country - the country is UAE ...

I didn't think there was a single country on this planet that was entirely tax free - a quick Google of "Tax in Dubai" brought up this page - I urge you to read it carefully.

I have no wish to delve into your private tax affairs but only to again urge you to be fully aware of your tax obligations to HMRC - the key question is: did you live in Dubai and register to be taxed there? If not, you will still owe UK HMRC tax for your earings abroad, e.g. PAYE, CGT, etc. [including property rental profits - taxed as income]

Now, I have more bad news for you - I mentioned in an earlier post about HMRC's International Exchange of Information - basically sharing financial data with other countries - here's the link to the shortened version - again, I urge you to read these 4 pages.

The final possible nail in your coffin is that UAE are on the list of countries sharing data with HMRC.

Do you do an annual Self Assessment for HMRC? If you don't / haven't [at this point I have to declare I'm not a tax specialist or accountant so this advice is worth exactly what you paid for it] you can either contact HMRC and fess up [via a SA] or spend the next 7 years hoping you don't meet HMRC yield criteria for a tax investigation. [or someone dobs you in to HMRC]

Good luck ....

 

[mikeyjh]

Listen, think of it this way - all lenders want to know on any loan is, can the borrower(s) afford to repay, simple as that. Many lenders had their fingers burnt a few years back with sub-prime lending so now they [most] are more cautious.

For a residential loan [e.g. on your own house] affordability is measured against the income of the occupants / borrowers - i.e. where is the money coming from for the mortgage payments - so the amount you can borrow is tied to this [income].

For a BTL loan, the repayments are coming from the tenant's rent, not the owners salary [assuming tenant occupancy] - so the amount you can borrow is tied to the rental value [as set by the surveyor, not you].

Hopefully, this finally concludes the "how much can I borrow for a BTL mortgage" [in it's most basic terms]

I'd add one thing that appears to get lost in this conversation - The lender, of course, will ask if you can afford it. One should always also ask one's self if it is affordable.

 

[knocky1]

You will be waiting a long time.

Sorry.

What if HMRC get their hands on it?

http://www.mynewsdesk.com/uk/hm-rev...andlord-sentenced-for-ps1-2m-tax-fraud-923429

 

[Triggaaar]

The lender, of course, will ask if you can afford it.

When asked questions that require a little imagination, I like to answer in the voice of Top Cat.
Can I afford it Benny, eh ha, eh ha.

 

[Renegade1]

Why? The rent covers the mortgage, what's the problem?
I was earning nothing and borrowed 7 figures.

Yes, really.

Brilliant.

Did it work out well for you?

If you want to make money you have to take a chance I guess.

 

[Renegade1]

What if HMRC get their hands on it?

http://www.mynewsdesk.com/uk/hm-rev...andlord-sentenced-for-ps1-2m-tax-fraud-923429

WTF.

I paid all tax on rental and CGT.

Sorry.

 

[Renegade1]

Oh dear ! Firstly, to the best of my knowledge, Dubai is a city not a country - the country is UAE ...

I didn't think there was a single country on this planet that was entirely tax free - a quick Google of "Tax in Dubai" brought up this page - I urge you to read it carefully.

I have no wish to delve into your private tax affairs but only to again urge you to be fully aware of your tax obligations to HMRC - the key question is: did you live in Dubai and register to be taxed there? If not, you will still owe UK HMRC tax for your earings abroad, e.g. PAYE, CGT, etc. [including property rental profits - taxed as income]

Now, I have more bad news for you - I mentioned in an earlier post about HMRC's International Exchange of Information - basically sharing financial data with other countries - here's the link to the shortened version - again, I urge you to read these 4 pages.

The final possible nail in your coffin is that UAE are on the list of countries sharing data with HMRC.

Do you do an annual Self Assessment for HMRC? If you don't / haven't [at this point I have to declare I'm not a tax specialist or accountant so this advice is worth exactly what you paid for it] you can either contact HMRC and fess up [via a SA] or spend the next 7 years hoping you don't meet HMRC yield criteria for a tax investigation. [or someone dobs you in to HMRC]

Good luck ....

zzzzzzzzzzzzzz.

All tax paid.

Yes Dubai is of course not a country however as far as I know they operate separately from the other Emirates.
They have just or are just introducing VAT for the first time.

The cheek of it.

 

[Shropshire Seagull]

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

No I READ posts as well as write them ....

 

[Shropshire Seagull]

The country I had property in is tax free.

Seems to be at odds with ...

All tax paid.

And

zzzzzzzzzzzzzz.

Indeed, I too have become weary of this thread .....

 

[Renegade1]

Seems to be at odds with ...



And




Indeed, I too have become weary of this thread .....

This is difficult.

Yes the country/city/emirate I had property in was Dubai which is tax free.
However the country I brought the rental money and proceeds from
property sales into was the UK which is not tax free so therefore
yes I paid all tax due.

 

[SK1NT]

Silly question probably.

So my sister, like most cannot afford to get on the property ladder as a first time buyer due to the salary multiples. Could she go straight into BTL as means to get on the ladder? As all she will need is 20% deposit and and 125% (lower tax bracket) rent to cover mortgage payments? or can you only do BTL once you have a residential mortgage. Obviously she will rent this out as she continues to stay at home.

It seems easier to get a BTL mortgage than a residential.

 

[Renegade1]

Silly question probably.

So my sister, like most cannot afford to get on the property ladder as a first time buyer due to the salary multiples. Could she go straight into BTL as means to get on the ladder? As all she will need is 20% deposit and and 125% (lower tax bracket) rent to cover mortgage payments? or can you only do BTL once you have a residential mortgage. Obviously she will rent this out as she continues to stay at home.

It seems easier to get a BTL mortgage than a residential.

Posted by Uncle Spielberg:

'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'

 

[Uncle Spielberg]

Silly question probably.

So my sister, like most cannot afford to get on the property ladder as a first time buyer due to the salary multiples. Could she go straight into BTL as means to get on the ladder? As all she will need is 20% deposit and and 125% (lower tax bracket) rent to cover mortgage payments? or can you only do BTL once you have a residential mortgage. Obviously she will rent this out as she continues to stay at home.

It seems easier to get a BTL mortgage than a residential.

It is possible but lenders are wary of gaming. Please note it is 125pc x 5.50 pc on not the mortgage rate

 

[Renegade1]

So.If someone earned the required salary and had the required 25% deposit for a property which was to be let for
£1000, what is the max they could borrow? Would it be whatever £750 per month would cover as that
would allow for the 125%?

 

[LlcoolJ]

So.If someone earned the required salary and had the required 25% deposit for a property which was to be let for
£1000, what is the max they could borrow? Would it be whatever £750 per month would cover as that
would allow for the 125%?

£800. Your maths is wrong.

 

[SK1NT]

It is possible but lenders are wary of gaming. Please note it is 125pc x 5.50 pc on not the mortgage rate

Gaming? What i suggested would be legal though? it seems like the only decent to get on the property ladder.

 

[Herr Tubthumper]

This is difficult.

Yes the country/city/emirate I had property in was Dubai which is tax free.
However the country I brought the rental money and proceeds from
property sales into was the UK which is not tax free so therefore
yes I paid all tax due.

But most of the time it’s where you live where you pay tax. We’re you living in the UK at the time?