Financing owned buy to let property

[jhw333]

Property nearby has come up cheap that I can buy, owner wants a quick sale and I want to pay the guy without finance initially, everything above board obviously.

When it's rented out would this change any parameters to mortgage the property in 6 months time if I actually own it with no mortgage at all?

I would want around 75% LTV preferably interest only but not totally essential.

Thanks

[BoRED S2upid]

No problem that I can see doing this.

[Sarnie]

jhw333 said:

Property nearby has come up cheap that I can buy, owner wants a quick sale and I want to pay the guy without finance initially, everything above board obviously.

When it's rented out would this change any parameters to mortgage the property in 6 months time if I actually own it with no mortgage at all?

I would want around 75% LTV preferably interest only but not totally essential.

Thanks

You will be able to mortgage the property within the first six months but you will only be able to use your purchase price as the valuation, irrespective of any work or improvements you've done.

Once you've owned it six months you can remortgage it and use the current market value at that time but expect them to questions exactly how or why the property value has risen in 6 months.

To raise the 75% you will need to ensure the rental is sufficient to comply with affordability calculations.

For a BTL you can go Interest Only or Repayment, no problem at all.

[Countdown]

BoRED S2upid said:

No problem that I can see doing this.

As above. Lots of people use the financing on Property 1 too buy a second BTL, and so on and so on.

You'll have to get a BTL mortgage as opposed to a normal owner/occupier mortgage, these tend to be a bit more expensive. Also the bank will expect rental income to be 125% of mortgage repayment, unless you have surplus other income.

[Sarnie]

Countdown said:

Also the bank will expect rental income to be 125% of mortgage repayment

It's not 125% of the mortgage payment, it's 125% (130% with a few companies) of the monthly interest on the balance calculated using that lenders specific interest rate which is between 5-7% across the board.

[Stevemr]

When you do remortgage, its well worth using a Broker, as there are a lot of deals only available through Brokers and you need to be able to look at the total to pay even more than normal mortgages as fees tend to be quite high.