Buy_2_Let_LP

With buy to let, the maximum loan is based on rent.  This can vary from lender to lender.  Basically lenders want the rent to be higher than the mortgage payments by a certain percentage.  

The calculation is based on your income, tax status, what is called the gearing rate or ICR, the type of property (e.g. HMO) and number of BTLs owned.

To understand further click here: Rental Income Calculation

Many lenders lend more to Basic rate tax payers as they assume Higher rate tax payers will pay more tax on the rent and have less rent to service the loan. 

Limited Company BTL

Another option is to purchase under a limited company.  There are both advantages and disadvantages.  The loan calculation under a Ltd Company is similar to a Basic Rate Taxpayer so more can be borrowed.

Maximum loan on a BTL mortgage is based on several factors.  These are primarily:

1. Rent.
2. Value of property.
3. Your income declared for tax.
4. Type of income – earned, rental, retired, other.
5. Homeowner or not & number of BTL properties.
6. Is the new purchase or remortgage a HMO.
7. Private or Ltd Co ownership. 

Detailed example calculation of BTL loan can be found here: Loan calculation example

If you provide the above  information, we can tell you with high accuracy your maximum loan. 

There are 3 types of lenders based on the income requirement.

1. No income.
2. No minimum income, but need some income.
3. Minimum income of some level – can vary from 12k/yr to 25k/yr for a single applicant.

As with all mortgages rates are related to the lender, LTV, credit score and fees.  Lower the rate, higher the fee. 

Higher the star rating below, higher the fee.

Not all lenders lend to all types of tenancies, but we have lenders that cover all of them  separately.

Individual

Family

Corporate

Students

DSS

Standard – houses & flats

Flats above commercial

HMOs up to 8 bedrooms

Multi Let units (no HMO licence)

Studio flats (min 30 sqm)

High rise flats

Ex-local authority property

Multi units up to 10 flats.

For any that are not on the list please call.

Lenders restrict BTLs for those who does not own their own home or does not own any other property.  This is to prevent scheme  abuse (such as a when a property is bought as a BTL and the owner lives in it).  However, some lenders do allow it under following conditions.

1. On a joint application where one applicant is a homeowner. 

2. Owned a property in the recent past.

3. When the loan is based on income and affordability just like for a residential mortgage. 

– One photo identification for each applicant e.g. passport, valid driving licence with photo.

– One proof of current address, e.g. utility bill – gas, electricity, water, phone, council tax statement, credit card statement, bank statement.  Must be dated within last three months.  No mobile phone or cable TV bills.

– Last three month’s pay slips if employed.  Details of self employed income (if applicable).  Latest bank statement to show salary deposited.

– Up to date information on exisiting credit or loans – amount outstanding and monthly payments.  This is necessary to calculate maximum loan available.

– Details of current or previous adverse credit information (if applicable).  This will affect the lenders available.  High street lenders (e.g. Nationwide, Halifax, Santander etc) requires a clean credit history.  If not other lenders available.

[Lenders may also ask for additional documents after receiving the full application.]