| buy to let mortgages [message #390176] |
Do, 18 Mai 2006 00:52 |
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just a couple of quick questions i'm sure somebody will be able to
answer
i'm thinking of a buy to let.... around 100-150k region
- is the deposit required 15% ?
- do they look at salary at all ?
- or do they just want to know the rent will cover the mortgage
payments?
thanks!
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| Re: buy to let mortgages [message #390184 ] |
Do, 18 Mai 2006 12:11 |
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"beno" <beno [at] dsl.pipex.com> wrote in message
news:1147906320.793189.97530 [at] i39g2000cwa.googlegroups.com...
> just a couple of quick questions i'm sure somebody will be able to
> answer
>
> i'm thinking of a buy to let.... around 100-150k region
>
> - is the deposit required 15% ?
Generally, yes.
>
> - do they look at salary at all ?
Some lenders do, some don't. Some expect you to have a salary of at least
£10K, others £20K, others nothing.
>
> - or do they just want to know the rent will cover the mortgage
> payments?
Generally, yes. But not just cover the payments. They usually expect the
rent to be around 125% of the interest payments (known as rental cover).
Some use the interest that they actually charge, some the interest that
would be charged if you weren't on a special deal for a year or two. And the
'rent' is not what you get but what the surveyor reckons is the rental
value, which may be more or less than you're actually getting..
The problem with borrowing as much as 85% of the value is that, unless the
rent is quite good compared with the property value, the renatl cover will
cut down what you can borrow.
Rob Graham
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| Re: buy to let mortgages [message #390192 ] |
Do, 18 Mai 2006 15:19 |
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ok cheers Rob I can make some plans.... based on the 15% deposit
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| Re: buy to let mortgages [message #390193 ] |
Do, 18 Mai 2006 15:31 |
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Rob graham wrote:
>
> "beno" <beno [at] dsl.pipex.com> wrote in message
> news:1147906320.793189.97530 [at] i39g2000cwa.googlegroups.com...
>> just a couple of quick questions i'm sure somebody will be able to
>> answer
>>
>> i'm thinking of a buy to let.... around 100-150k region
>>
>> - is the deposit required 15% ?
>
> Generally, yes.
Indeed. Often 20%. Of course, you can always borrow the shortfall
from another source, such as remortgaging another property. :-)
>> - do they look at salary at all ?
>
> Some lenders do, some don't. Some expect you to have a salary of at least
> £10K, others £20K, others nothing.
Yes, this is presumably to weed out people who are going to be dependent
on the rent as the sole source of income from which interest (at least,
or capital re-) payments will be met.
>> - or do they just want to know the rent will cover the mortgage
>> payments?
>
> Generally, yes. But not just cover the payments. They usually expect the
> rent to be around 125% of the interest payments (known as rental cover).
> Some use the interest that they actually charge, some the interest that
> would be charged if you weren't on a special deal for a year or two. And
> the 'rent' is not what you get but what the surveyor reckons is the rental
> value, which may be more or less than you're actually getting..
>
> The problem with borrowing as much as 85% of the value is that, unless the
> rent is quite good compared with the property value, the renatl cover will
> cut down what you can borrow.
Exactly. If the yield is as low as the interest rate (and it can be a lot
less now that prices have shot up more than rents have), then a 125% cover
requirement automatically forces a 20% deposit. With a 6% interest rate
and a 5% yield, you're looking at a 33% deposit.
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