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What interest rate on this BTL mortgage?


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Hypothetical, but own a £245k house outright. It has been rented to the current tenant for £1200pcm for the last 12 months. Owner has no other income but has £200k+ investments in the markets.

At these LTVs what interest rate might be available on a BTL interest only mortgage please?

80%

70%

60%

Would management fees being 12% of rent make a difference to the LTV? Thanks!

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Your question is too vague to come up with an answer. The rate you pay is dependent on a number of factors:
 

  • How long is your mortgage term? 5y rates are higher than 2y rates
  • Limited company mortgages have higher rates
  • Is the property above a shop? Some lenders won't lend to you
  • Do you own your own home. Some lenders prefer that
  • The LTV of your loan

As you can see, there's lots of factors that affect your rate. 

In your hypothetical example, you earn £1,200 per month, i.e. £14,400 per year. This would limit who would lend to you. A lot of lenders look for £20k minimum income. 

12% management fee would affect the income the owner earns. It makes no difference to the LTV calculation

Buy To Let mortgages rate start at 1.5% for the very best deals, and go up to 5%. The rate you pay will (probably) be between those 2 values

I wrote a primer on buy to let mortgages. It covers these concepts in more detail

Hope this helps...

 

_______________________________________________________________________________________________________________________________
Vin Gupta
Property Investor and Developer
UK Property Blog: https://evolutionblogger.com/article/uk-property-articles
Travel Blog: https://soulfultravelguy.com/

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On 2/12/2021 at 8:43 PM, EvolutionBlogger said:

Your question is too vague to come up with an answer. The rate you pay is dependent on a number of factors:
 

  • How long is your mortgage term? 5y rates are higher than 2y rates
  • Limited company mortgages have higher rates
  • Is the property above a shop? Some lenders won't lend to you
  • Do you own your own home. Some lenders prefer that
  • The LTV of your loan

As you can see, there's lots of factors that affect your rate. 

In your hypothetical example, you earn £1,200 per month, i.e. £14,400 per year. This would limit who would lend to you. A lot of lenders look for £20k minimum income. 

12% management fee would affect the income the owner earns. It makes no difference to the LTV calculation

Buy To Let mortgages rate start at 1.5% for the very best deals, and go up to 5%. The rate you pay will (probably) be between those 2 values

I wrote a primer on buy to let mortgages. It covers these concepts in more detail

Hope this helps...

 

Thanks for the response. But if you read my post instead of promoting your own website you would have got a lot of the information you asked for. I would be happy with any length mortgage suggestions as I am gauging the interest percentage to use for my calculations. Hence why I would like to get information at various LTVs. It's not above a shop or in an LTD company, otherwise I would have mentioned this.

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Respectfully. From your question, it sounds like you don't know that much about this area. 

The answer I gave was pretty good. Especially as your question was very vague. The mortgage market is fast moving. Rates are heavily dependent on the factors I mentioned 

I think you would benefit from reading the article I wrote. If that is beneath you, then you don't need to bother 

I'm sure you'll go far with this attitude..

Frankly, I'm not inclined to give you any more information at this point 

_______________________________________________________________________________________________________________________________
Vin Gupta
Property Investor and Developer
UK Property Blog: https://evolutionblogger.com/article/uk-property-articles
Travel Blog: https://soulfultravelguy.com/

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2 hours ago, EvolutionBlogger said:

Respectfully. From your question, it sounds like you don't know that much about this area. 

The answer I gave was pretty good. Especially as your question was very vague. The mortgage market is fast moving. Rates are heavily dependent on the factors I mentioned 

I think you would benefit from reading the article I wrote. If that is beneath you, then you don't need to bother 

I'm sure you'll go far with this attitude..

Frankly, I'm not inclined to give you any more information at this point 

Sorry to give you that impression but you posted the same link in another thread also...

I sent the same question to 3 brokers via email. They all replied with specific numbers based on LTVs with various mortgage durations. The question is vague and is looking for a range of answers. Maybe you were overthinking it.

I did click on your link and was returned with generic information about BTL mortgages that was not relevant to my question e.g. "I now explain in detail, what a buy to let mortgage is. A buy to let mortgage is a home loan provided to property investors. A key condition of these loans, is that the investor can’t live in the property. They must rent the property out to a different person and receive rent."

If you honestly think your website would have helped me, can you share the relevant part please?

Best of luck with your website, I can see you're trying hard with the SEO.

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The reason you haven't had much response on this post from the many brokers on here is because there simply isn't enough information provided to give a sensible answer.

I wouldn't be doing a very good job as a broker by giving you rates based on the limited information you provided - I would need to understand more about you and the property to see which products and lenders would assist. 

Vin took the time to reply to you above and attempted to ascertain some key points which would determine if you fit mainstream products or would need a lender with a more flexible approach so I think your reply to him is a little harsh. 

We could all post headline rates, however once you present your circumstances and full details of the asset you may not actually qualify for any of those lenders/products. 

Personally I would stick with the advice of one of the brokers you have approached as finding the right solution is going to require you to provide full information, and it wouldn't be appropriate to do this in a public forum post anyway. 

Regards

Kirsty

 

 

Property investor ¦ Commercial Finance Broker ¦ Ex banker with 20 years lending experience. 

Commercial Lending Manager at Real Finance Ltd - www.realfinance.co.uk
Happy to discuss any queries regarding property finance for  Company/Complex BTL, HMO, MUB, Holiday Let, Commercial, Bridging & Development.  

kirsty@realfinance.co.uk
07494949852

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6 hours ago, henry g said:

I sent the same question to 3 brokers via email. They all replied with specific numbers based on LTVs with various mortgage durations. The question is vague and is looking for a range of answers. Maybe you were overthinking it.

Ok. I'm really sorry that those brokers gave you a set of interest rates. Those rates are meaningless, as they won't know whether you qualify for those products. They would need to know more about your circumstances and about the property

The SEO of my website would not be affected by posting on this forum, as the links are 'no follow.' I want to share my knowledge, that I have accumulated over the years. I do that on my websites and on different forums

If you want to read my articles then great, but please don't think you're doing me a favor. I'm doing just fine

This page is a directory of the UK property articles. There's lots of high quality stuff there, but I don't know what is relevant to you

_______________________________________________________________________________________________________________________________
Vin Gupta
Property Investor and Developer
UK Property Blog: https://evolutionblogger.com/article/uk-property-articles
Travel Blog: https://soulfultravelguy.com/

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3 hours ago, EvolutionBlogger said:

Ok. I'm really sorry that those brokers gave you a set of interest rates. Those rates are meaningless, as they won't know whether you qualify for those products. They would need to know more about your circumstances and about the property

The SEO of my website would not be affected by posting on this forum, as the links are 'no follow.' I want to share my knowledge, that I have accumulated over the years. I do that on my websites and on different forums

If you want to read my articles then great, but please don't think you're doing me a favor. I'm doing just fine

This page is a directory of the UK property articles. There's lots of high quality stuff there, but I don't know what is relevant to you

Yes I didn't mean the links. I meant the way you were writing the sentences. It reminded me of a style I used to use with YoastSEO plugin on Wordpress.

I'm really sorry to assume negative of you just because you didn't read the whole information in my thread. Thanks for showing interest and I did appreciate the reply!

 

 

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8 hours ago, kirsty_c said:

The reason you haven't had much response on this post from the many brokers on here is because there simply isn't enough information provided to give a sensible answer.

I wouldn't be doing a very good job as a broker by giving you rates based on the limited information you provided - I would need to understand more about you and the property to see which products and lenders would assist. 

Vin took the time to reply to you above and attempted to ascertain some key points which would determine if you fit mainstream products or would need a lender with a more flexible approach so I think your reply to him is a little harsh. 

We could all post headline rates, however once you present your circumstances and full details of the asset you may not actually qualify for any of those lenders/products. 

Personally I would stick with the advice of one of the brokers you have approached as finding the right solution is going to require you to provide full information, and it wouldn't be appropriate to do this in a public forum post anyway. 

Regards

Kirsty

 

 

Thanks Kirsty. What further information would you require? Or maybe more importantly what further requirements are there? I was thinking it was quite a straightforward situation, unless there was something I am missing, hence the reason for posting. I can see headline rates myself.

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I think the main issue with answering the question is that you doing the reverse of what a broker would. 

A broker first assesses your whole circumstances, then uses contacts and experience to steer towards lenders who will work with your situation, and then will show you the best rates and deals which accommodate your requirements. 

The problem with rate chasing first is it gets painful when it becomes apparent that you don't meet specific criteria of the product you are targeting and have to keep changing direction and trying another. There's lots of lenders out there with hundreds of products and they all have appetite to assist different scenarios. Its very rare a case is totally vanilla and simple, all have their own quirks. From the information you provided it appears you may not qualify for some lenders due to your income structure.. but without knowing the full picture and what your tax returns show etc, its hard to comment further.

As you have engaged 3 brokers already it would make sense that you stick with one, provide your information and ask them to show you what deals are available to you.

Regards

Kirsty

 

 

 

Property investor ¦ Commercial Finance Broker ¦ Ex banker with 20 years lending experience. 

Commercial Lending Manager at Real Finance Ltd - www.realfinance.co.uk
Happy to discuss any queries regarding property finance for  Company/Complex BTL, HMO, MUB, Holiday Let, Commercial, Bridging & Development.  

kirsty@realfinance.co.uk
07494949852

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  • 2 weeks later...
On 2/12/2021 at 8:43 PM, EvolutionBlogger said:

Buy To Let mortgages rate start at 1.5% for the very best deals

Hi, I’m looking to get a BTL mortgage on a mixed use shop with flat above that I bought outright in June.  I purchased this through my limited company and I heard Rob & Rob say on a recent podcast that more lenders are adding more products to the market now.  
 

My own business bank (Barclays) did offer me a 60% LTV back in October time,  and this was considerably better than what my broker could find for me at that time.  

Back in October I also approached Aldermore, as I’ve got 2 x other BTLs with them and have been with them about 4 years, but surprisingly they said they couldn’t help me at that time. 
 

So my main question is I’d like to do a bit of shopping around again now, so can anyone suggest any lenders for me to approach ? Just so I can get a feel of whether any of the lenders have really relaxed a bit since October and might suit my situation and then I’ll go back to my broker to see if he has any better deals going on as well. Hope that makes sense, thank you 

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Lender appetites are pretty low on commercial retail assets, particularly trading shops which have been affected by COVID. Unless the shop tenant is an 'essential service' business -newsagent, dentist etc and has operated with no issues through the pandemic then you are going to struggle getting lenders on board at this time.  

Brokers on here aren't going to tell you which lenders to use, for you to return with that information and do the business through your original broker ;).  A couple of the lenders I regularly work with will go upto 70-75% if the asset is right and rental income stacks up. If your broker cant offer these products then perhaps they are simply not geared up for this kind of more specialised lending and you need to be talking to someone who is used to dealing in this space to get the best solution. 

 

Property investor ¦ Commercial Finance Broker ¦ Ex banker with 20 years lending experience. 

Commercial Lending Manager at Real Finance Ltd - www.realfinance.co.uk
Happy to discuss any queries regarding property finance for  Company/Complex BTL, HMO, MUB, Holiday Let, Commercial, Bridging & Development.  

kirsty@realfinance.co.uk
07494949852

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9 hours ago, kirsty_c said:

Lender appetites are pretty low on commercial retail assets, particularly trading shops which have been affected by COVID. Unless the shop tenant is an 'essential service' business -newsagent, dentist etc and has operated with no issues through the pandemic then you are going to struggle getting lenders on board at this time.  

Brokers on here aren't going to tell you which lenders to use, for you to return with that information and do the business through your original broker ;).  A couple of the lenders I regularly work with will go upto 70-75% if the asset is right and rental income stacks up. If your broker cant offer these products then perhaps they are simply not geared up for this kind of more specialised lending and you need to be talking to someone who is used to dealing in this space to get the best solution. 

 

Hi I’ve only just noticed this was in the brokers email back then, (PLEASE SEE PHOTO)

so you hit the nail on the head, I didn’t realise that even mortgage brokers “specialised” , so therefore I am looking for a good broker who can help me with my first mixed use property.  Now there’s a bit more of a complication or it might be to my advantage ?  I’m sure you’ll let me know... although I bought the property with separate tenants renting the shop and the flat, so therefore the whole building was bringing in rather good rental income combined, the situation has changed with the shop tenant vacating at the end of their lease last month.
 

 Now I did buy this shop as I’m actually renting another shop 10 doors down...  sooooo.., I’m assuming no one will lend to me whilst it’s vacant ? But what if I moved my established business into my shop ?  Will that change things somewhat from the lenders point of view or not ?  As I won’t of course be paying rent to my own company now will I !!!  Thing is that confuses me a tad is that Barclays (a couple of years ago) would ONLY lend to me if I was owner-occupier.

thanks you, maybe you could run me some figures Kirsty ?  Thanks Lisa 

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