Question regarding "Buy to let" finance

spank_inferno

Hi guys

Regarding trying to find finance for a buy to let, is there any institution that will offer a higher loan to value ration than 75% ??

Having difficulty in finding anyone.


Many thanks

noxqs

The current risk for the bank in a buy to let scenario is quite high given several factors:

(1) Rent is too high now given current property prices. RA/RS is currently creating an artificial floor which will be dropped sooner or later. Thus, rents will drop.
(2) House prices are still in free fall.
(3) Mortgage repayments which may rely on (1) plus empty tenancy periods.

This would require quite a deposit to secure. I'd be surprised if you could even get a buy to let on 75% unless you have substantial debt-free assets to back it up.

Also: Borrowing money with the intention to make money is called gearing, and it's extremely dangerous. Avoid at all costs.

antoinolachtnai

Even during the heady days of the boom, it was unusual to be able to borrow more than 80 percent of the value. You are doing well if anybody will give you 75 percent.

ricman

Interest rates are going up, house prices falling ,unless you are buying a house
very cheap for buy to let, Its very risky.You borrow 100k,you pay back 200 k plus to the bank.Investment mortgages are charged a higher interest rate than a standard loan.In the boom investors were buying cos houses prices were going up,so in many cases the rent barely covered the mortgage.The government is considering reducing rent allowance which would effect the whole rental market ,even investors who don,t take ra clients.

antoinolachtnai

Well, investors bought because of the tax benefits. The tax benefits have been eroded now to a great extent. It is not really a great business to be in anymore. (It is very important to understand the tax aspects of the business before getting involved.)

paddy147

spank_inferno wrote: »

Hi guys

Regarding trying to find finance for a buy to let, is there any institution that will offer a higher loan to value ration than 75% ??

Having difficulty in finding anyone.


Many thanks

Stick your money into gold,as investing in property is not worth it these days,especially with constant falling prices and values.

ABEasy

I'd need to be looking for a 17-20% gross rental yield before even considering a buy to let in the current market. Esp. considering rent & capital value due to drop in the short term. But to answer your question to only buy to let I've heard of in recent times was 60% LTV with UB at 3% plus COF.

ABEasy

paddy147 wrote: »

spank_inferno wrote: »

Hi guys

Regarding trying to find finance for a buy to let, is there any institution that will offer a higher loan to value ration than 75% ??

Having difficulty in finding anyone.


Many thanks

Stick your money into gold,as investing in property is not worth it these days,especially with constant falling prices and values.

Gold at all time high values, you'll be buying at a peak price, akin to buying an apartment in Dublin in 2006... Plus you earn no income (possible capital gain excepted) from gold. Bad investment but good short term safe haven for cash...

spank_inferno

ABEasy wrote: »

I'd need to be looking for a 17-20% gross rental yield before even considering a buy to let in the current market. Esp. considering rent & capital value due to drop in the short term. But to answer your question to only buy to let I've heard of in recent times was 60% LTV with UB at 3% plus COF.

Hey

Can you clarify what you mean by 17-20% gross rental yield?

The property we are looking at would produce 9% of the mortgage value per year in rent

Is that what you are refering to?

Many thanks

subway

gross yield is annual income divided by cost price.
forget about the mortgage price
on a 200k house you would want to be getting 10k a year in rent to make 5% interest.
most banks will give ~4% on deposit fo 5% is a **** return (if you can even get it) given the extra cost and risk involved.

forget about covering the mortgage or anything like that, look at the return.
then look at all the costs (tax, upkeep, vacancies, capital erosion, rent decreases) that are going to make that measly 5% look like .001%

e.g. house i am renting, 9800 pa. asking price for house in area is ~300k
this is 3.2% return. that 300k is better off in the bank before costs are considered

at todays rates etc, the landlord will have paid off the mortgage long before the rent covers it. and that doesnt take into account all the associated costs and the 60day (i think) vacancy time between rentals.

Raskolnikov

spank_inferno wrote: »

Regarding trying to find finance for a buy to let, is there any institution that will offer a higher loan to value ration than 75% ??

I believe that KBC may do an 80% mortgage for investment properties, but not apartments. Is that any good to you?