Category: buy to let finance

What landlords need to think about for 2018

It looks as though 2018 will be a mixed year for landlords. Some will start to feel the pinch of the legislation that’s recently come into force, such as the loss of mortgage interest relief, while a number of tenants may give notice, due to incentives to buy. At the same time, there are likely to be some good deals around for landlords looking to expand their portfolios. For the rest, who may not have the means to buy in the next 12 months, it’s a good opportunity to take stock of their portfolio and make small improvements where needed to help translate rental income into better profits.

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new three bedroom rental coming available today in burnage

New rental coming on today in Burnage..

Posted by Julian Wadden Estate and Lettings Agents on Monday, January 15, 2018

New three bedroom family home in Burnage coming available for £850pcm.

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How does rental income affect the amount you can borrow?

The relationship between rental income and the amount you can borrow to finance your investment is one of the most important.

One of the first checks lenders make when you apply for a buy-to-let mortgage is whether the rental income is high enough to cover the repayments and associated costs of letting the property.

Although it can vary, lenders usually want rental income to be 125-130 per cent of the amount you repay on the mortgage each month. Knowing this, it makes sense for you to check these figures for yourself, before you apply, by following these steps:

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new rules on borrowing for portfolio buy-to-let investors

From the 30th September this year, landlords with four or more buy-to-let properties will have to satisfy different criteria to secure mortgage borrowing, as they will be considered ‘portfolio investors’ under new rules being introduced by the Prudential Regulation Authority. 

In order to comply with the new portfolio landlord underwriting standards, lenders will now be looking at the total income versus borrowing across all a landlord’s properties, to ensure that any new borrowing doesn’t adversely affect affordability for other properties within the portfolio.

This means more work for lenders, who will have to investigate each mortgaged property held by the landlord in more detail, then apply an Interest Coverage Ratio (ICR) across the portfolio. This ICR will vary, depending on the individual lender and the number of properties owned with a mortgage

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Are Student Lets a Good Investment?

Although letting to students used to be considered the bottom of the buy to let market, it’s a very different proposition today. That’s because three key shifts have taken place in the market over the last decade: increased health and safety legislation for all rented properties, the expectation of a better standard of living from this generation of students and the growth of institutional investment.  

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