House/mortgage/btl Advice

[Ric.ror]

Here's a scenario for you - Imagine if you owned a house worth £200K - no mortgage - well only about £3k - and the rental income was in excess of £850 PCM - and that was all. How much would a lender be prepared to lend in order to buy another BTL (if any at all)?

Thanks in anticipation

[woofgang]

You'd need to ask the lender.

[ubasses]

BTL are usually assessed independently of other mortgages. It would depend on how much deposit you had to put down,probably a minimum of 25% and whether the rental income was sufficient to meet around 130% of the monthly interest payments. You would be expected to own your own property and have a good credit record.
I will add my normal caveat that I have been retired a few years now so things could be even tighter.

[Ric.ror]

Thank you ubasses

[Retrochic]

Things are a lot tighter. You are allowed only one private mortgage per person and its irrelevant how much is left on it. A BTL is based on your income and outgoings (includes any private mortgage repayments)and a BTL mortgage company will ask for proof of income,you can no longer self-certify. Most BTL mortgage companies require 30 -40% down payment depending on the type of property and the potential rental income must be at least 130% of any mortgage repayments. You have to prove this by getting a rental company to provide a written assessment. BTL mortgage rates are much higher than private mortgages at around 3-6% and you have other outgoings such as you must have Landlord Insurance -around £250 a year and provide Gas Certificates each year if there is a gas boiler or fire -around £125 for check and certificate. Most BLT's are based on Interest only repayments so you may need to provide for the fact you will have to pay back the original cost of the mortgage at the end of the Term.

[Ric.ror]

Thank you Retrochic