Buy to let mortgage - joint names / single names
Discussion
We are looking at our first buy to let. Cost approx 600k with a 60% LTV. The property should be cash flow positive. My wife is a basic rate taxpayer based on investment income only (she works as a volunteer for a not for profit) I am a higher rate taxpayer.
I'd like the property in her name so we pay less tax on the income but is this likely to cause complications with the mortgage?
Any thoughts or suggestions would be much appreciated
Thanks in advance
I'd like the property in her name so we pay less tax on the income but is this likely to cause complications with the mortgage?
Any thoughts or suggestions would be much appreciated
Thanks in advance
How could she get a mortgage with low earnings? Based on rental income? Typically mortgage companies either look at salary or rental income - specifically 125 or even 130% of rental to cover payments, net of any agent fees.
Come disposal, two names may be better than one.
The interest element of mortgage can be used to offset against rental income, so tax liability may not be as high as expected.
You say rental "should" cover mortgage. What happens when interest rates rise? Madness to even consider if things are tight.
Get some good advice, legal and financial.
Come disposal, two names may be better than one.
The interest element of mortgage can be used to offset against rental income, so tax liability may not be as high as expected.
You say rental "should" cover mortgage. What happens when interest rates rise? Madness to even consider if things are tight.
Get some good advice, legal and financial.
Sarnie said:
Most lenders require a minimum salary of £20k, some are higher.
The rental must be phenomenal to cover a £360k mortgage payment by at least 125%, which is what will be needed....
And correct me if I'm wrong mr sarnie - a lot are stress testing the 125%+ on a 7% Interest rate. (well, Natwest are) people complain but when you look at it it could be good buying sense!The rental must be phenomenal to cover a £360k mortgage payment by at least 125%, which is what will be needed....
FlashmanChop said:
And correct me if I'm wrong mr sarnie - a lot are stress testing the 125%+ on a 7% Interest rate. (well, Natwest are) people complain but when you look at it it could be good buying sense!
Yep, they will use a notional rate to determine the monthly mortgage payment that the rental will need to be 125%. This will be circa 5-7% depending on the lender and the deal before them.It's for this reason, that large BTL mortgages just don't seem to make sense. Once you get over about £250k the required rental figures are huge.
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