Buy to let

WhiteWalls

If a couple go for a mortgage and one of them already has a property, are that couple viewed as a second time buyer?

Also what is the banks view on a second property that is rented and is covering the second mortgage?

Any advice appreciated

PetitPois89

WhiteWalls wrote: »

If a couple go for a mortgage and one of them already has a property, are that couple viewed as a second time buyer?

Also what is the banks view on a second property that is rented and is covering the second mortgage?

Any advice appreciated

Only know the answer to part one - you wouldn’t be considered first time buyers if one half of the couple has a property already

Edgware

WhiteWalls wrote: »

If a couple go for a mortgage and one of them already has a property, are that couple viewed as a second time buyer?

Also what is the banks view on a second property that is rented and is covering the second mortgage?

Any advice appreciated

You are not first time buyers. As regards the second mortgage and buy to let I would say that the bank will do a fairly forensic examination of finances. Proof of rent received, tax return etc will come into consideration.
In the old days the local bank manager would make a decision but that day is gone

3DataModem

"Also what is the banks view on a second property that is rented and is covering the second mortgage?"

It is most likely going to significantly impact your ability to borrow. It would have to be generating a significant after-tax surplus (e.g. more than the mortgage payment in net cashflow) to help rather than hinder.

Example 1
Mortgage: 1000 per month
Rent: 1500 per month
= Almost certainly bad

Example 2
Mortgage: 1000 per month
Rent: 3500 per month
= Probably good

WhiteWalls

Example 1
Mortgage: 1000 per month
Rent: 1500 per month
= Almost certainly bad

Do you mind explaining how example 1 is bad?

Baby01032012

The poster meant with example one you’ve no cash flow. You’ve not enough there to cover mortgage and income tax. Say 1000 mortgage say interest is half so your paying 50% tax on 1000 ( rent less interest) so 500 tax. So not making any money. I haven’t taken into account any outgoings such as lpt rtb fees insurance management fees repairs. Nor have I discounted for rent arrears. Crude example but point is with example one BTL isn’t paying for itself.

kippy

WhiteWalls wrote: »

If a couple go for a mortgage and one of them already has a property, are that couple viewed as a second time buyer?

Also what is the banks view on a second property that is rented and is covering the second mortgage?

Any advice appreciated

This is worth a read:
https://amp.rte.ie/amp/1061094/
There's plenty other similiar article out there.
You'd generally need a higher deposit and will have a higher interest rate mortgage in a BTL as well as the points already outlined.

DubCount

For the bank, mortgages are about risk. A buy2let property may add a small amount of income after tax and mortgage repayments, but it also adds risks. If interest rates increase, the repayments on both your home mortgage and your buy2let mortgage will increase. If rents fall and your rent no longer covers the mortgage and taxes, can you afford to fund the difference. If your tenant leaves, can you afford void periods between lettings. Worst of all, if a tenant stops paying, is your income sufficient to pay your home mortgage and your buy2let mortgage while you go through the long eviction process. Its all more risk, and banks dislike risk.