| Buy To Let | ||
Most lenders require the rental to be 125% greater than a specified mortgage payment. EXAMPLE; Mortgage payment on interest only £100,000 mortgage @ 6% interest rate = £500 pm. Rent required = £625 pm. Some lenders need proof of minimum income in addition to rental income. Some schemes up to 85% are available, but typically a 25% deposit is required. Tenancy agreements (AST’s) in the form of 6 monthly agreements are accepted by all lenders, but for 12 month or longer contracts there are less lenders available. Council 3 year rent contracts are not acceptable to most lenders if they are aware at application the client intends to use 3 year contracts. Maximum age for Buy To Let mortgages in some instances can be well above normal retirement age. TAX Income Tax is due on any rental profit, which, is calculated by subtracting the interest only portion of the mortgage from the rental income. Income Tax rate is determined by reference to your current income Tax rate. Capital gains Tax is due on the sale of the property where a profit has been made over and above the price paid, together with some expenses (such as selling fees) and after deducting your CGT exemption. Property types Certain classes of property are excluded by the majority of lenders such as concrete, non – standard construction, above commercial premises, close to betting outlets, short leases, ex council flats, high rise and other non standard properties. New build Some restrictions may apply, for example where a lending group already has high exposure on a particular development. |