BTL "safest" LTV?

[trowelhead]

Interested to hear the PH consensus on what is a safe LTV to be in on BTL property at the moment?

I'm relatively young, don't mind a bit of risk. Holding for the long term 25 years plus timeframe.

60% seems quite failproof to me in terms of having a good enough chunk of equity to weather most storms (property price dips, interest rate hikes etc) whilst still benefitting from the effects of leverage.

Or is that too conservative, and better to go 75% or higher and buy more?

[Darranu]

Don't forget the governments slowly restricting interest tax relief to 20%. Very bluntly you'll be getting taxed on turnover not profit.
The more your leveraged the less you'll have left for your tax bill

[GT03ROB]

I don't think you will find a "Safe" figure, there are far too many variables at play.

Personally I think anybody doing BTL need to treat it like a business & have a business plan of sorts. If you have that you have your answer. Without one you are property speculator.

[22s]

Darranu said:

Don't forget the governments slowly restricting interest tax relief to 20%. Very bluntly you'll be getting taxed on turnover not profit.
The more your leveraged the less you'll have left for your tax bill

This is important. The way around this is to purchase your properties in a ltd co (for now).

Re: LTV levels, depends on a number of things. If you are planning on big cashflow from an HMO, then a higher LTV is generally fine. (We have 85% on one of our HMOs and still clear over £900 profit per month). If it's a tiny flat in the middle of nowhere working on very tight margins then you might want to do a 60% or lower.

As another poster alluded to, you need to get your strategy straight in your head first before asking questions about the LTV. What is your overall goal? Cashflow or capital appreciation? Will you buy fixer uppers or ready-to-rolls (if fixer then may need cash and therefore borrow at higher LTV)? What is your situation outside of property (if the boiler blows up or you move into a period of losing money each month, can you afford it)? Does the area have good fundamentals (train station, school, motorways, local employment) or are you possibly going to have long void periods that you will have to cover?

It really is very personal according to your situation and goals. There is no "safe" LTV and you really have to be smart about purchasing at the moment - it's not like before where you could buy any dump and then cash out for 20x your initial investment (or more) 20 years later.