Deposit for mortgage
Answered on 7 January 2018 by Nick Morrey
A year ago I bought a place with my Brother which I am currently living in. The property was bought for £350,000 with a £150,000 mortgage on it. I now have another £50,000 and would like purchase a property to do a buy to let, the house I would like to buy will be worth approx £320,000. What are the chances the bank will lend me the capital required given my situation? My salary is only £20,000 per annum.
If you are looking at buying a buy-to-let property at £320,000, with a deposit of £50,000 your mortgage will be £270,000. This makes your loan to value (the percentage of the loan against the value of the property you are borrowing against) 85%. Currently there are very few lenders operating at this level in the buy-to-let market, and the amount you can borrow will be largely based on the potential rental.
Lenders also typically like to see the rent covering the mortgage payments by at least 125% either at the pay rate or a notional rate, usually 5%. As an independent, whole of market mortgage broker we have a huge range of lenders that we work with which means we have more options available to us.
We would need to discuss the details with you, so the best thing to do would be to contact one of our mortgage experts on 0344 346 3672 and talk it through with them.
Answers provided in response to Ask the experts are based on the information provided and do not constitute advice under the Financial Services & Markets Act. They reflect the personal views of the authors and do not necessarily represent the views, positions, strategies or opinions of John Charcol. All comments are made in good faith, and John Charcol will not accept liability for them.
We recommend you seek professional advice with regard to any of these topics where appropriate.