Author Topic: UK Buy to Let 2017 mortgage rules  (Read 844 times)

FI-42

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UK Buy to Let 2017 mortgage rules
« on: January 15, 2017, 05:31:08 AM »
We are going through the process of buying our first property to let out, so I'd thought I'd give a run down of the mortgage situation as we are going through the process right now since the rules have changed this year.

The old rule was that you needed to have 25% equity in the BTL property, and have enough rental income to cover the mortgage interest assuming a 5% rate, +25%.
So on a property worth 200k you would need 50k in the house and charge at least (9375/yr) 781/month.

Now the rules are that you need 25% equity, and be able to cover the mortgage interest at 5.5%, +40%.  In essence, it means that you will make about 2% less margin and have put more equity in the property.  For example, let's assume you can only get 800/month rent income:
The amount you can borrow will be just short of 125k, so you will need to have 75k in equity (37.5%).

It's going to make things a lot harder, but BTL still is a great investment, especially if you are hoping to get some capital gain.


mohawkbrah

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Re: UK Buy to Let 2017 mortgage rules
« Reply #1 on: January 15, 2017, 10:48:16 AM »
and here i am still praying for a major housing crash



jinga nation

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Re: UK Buy to Let 2017 mortgage rules
« Reply #2 on: January 19, 2017, 06:19:05 AM »
and here i am still praying for a major housing crash
Hopefully May delivers it in May. If on May 1, that would be a massive May Day.