Buy to Let Income under 25K

A question about : Buy to Let Income under 25K

Hi,

Hoping someone in the know could help me and my mum on this one. My mum is looking to get a Buy to Let mortgage on a Ј370K house. She had the 25% deposit. She ownes her own house outright (worth around Ј350K) Problem being she only earns Ј14K p/a. Do you think she could get a BTL mortgage with under 25K salary?

Best answers:

• Theoretically the income is not an issue there are lenders who will look beyond it.
  A slightly bigger issue will be why she wants a Ј370k property on a BTL and how she would afford it if it was empty.
  Ј370k on a BTL when her residential property is worth less will raise some questions.
• Thanks so much for replying... I may have down played her property value, it could be around 400K. The property is in Surrey with extreemly high rental prices the house would bring in 1500K p/m, and with property prices increasing atm it is a great investment for her? any thoughts
• Speak to a broker.
  This will need to be run by the underwriter.
• Yes with property prices increasing and tenants covering her mortgage its a brilliant investment.
  Trouble is, nobody can tell you whether or not in 6 months time property prices may be falling and the house may be empty.
  That in a nutshell is the gamble of BTL. And make no mistake, thats what it is a gamble.
• Now if MUM has the Ј92500 deposit Plus say 2% arrangement fee of Ј5,550 to borrow Ј277,500 on a BTL property she would be paying around Ј925 ( Interest only) a month at 4% with her 25% deposit.
  With letting agents fees and other costs she might make Ј300/400 a month.
  Huge Gamble
• Does your mum have any experience in letting property? Residential or commerical. It's a lot of money to risk.
• Its a high LTV to be buying the first BTL. Income is good but the mortgage is so high. Im with getmore4less it doesnt look that good. If its left empty and the economy goes tits up can she afford that mortgage? If its on i/o and she hasn't paid any off and she doesn't have a suitable vehicle in place at the end of the term what will she do?
• Someone mentioned it earlier. If it's a BTL then why would somebody want such a poor return ? This is the sort of question any underwriter would be asking as it doesn't make much sense.
  Returns would be greatly improved by buying say three smaller cheaper properties rather than one dirty great expensive one.
• If house prices are rising faster than the national average that can overcome a poor return... although CGT may be applicable etc.
  Personally I think its a bad idea as I would rather have a Ј300k risk spread out especially where the income is not enough income to support it should something go wrong.
• I agree completely, but if you are looking at things from an income perspective there are many far better opportunities.
  Its never going to the the standard BTL mortgage but if you are not looking to maximise your return on a monthly basis then its not a bad idea - but its important the OP/OP mum realises interest rates are at an all time low so the return will go down in years to come and that house price rises may be liable to CGT so the profit she thinks she will make from house price rises could have a huge bite taken out of it.