Hi, does a buy to let mortgage count towards the personal allowance that a mortgage lender will lend?
I have a buy to let house (which is rented out at the moment) and would like to upgrade my residential house and wonder if the buy to let will affect the amount I can borrow.
In general terms having a succesful buy to let already in existence should NOT hinder your ability to get a personal mortgage. This is for a couple of reasons. If the buy to let is succesful and covering its own costs then it could even add to your total household income and thus improve your spending power and loan affordability. However lenders are very conservative about such income and often require that it be a well established 12 month of proven income - evidenced by rents books, banks receipts and the like. Even then some will only allow half of the rental profits to be regarded as reliable for further laon purposes.
The second aspect is that your credit file will show that you have the buy to let loan - but a well serviced second loan could actually help IMPROVE your credit score. This is because it is real evidence of your being a regular and reliable payer every month for however long with no missed, or late, payments. Lenders clearly value such evidence of being able to regularly service existing debts...... | 05.24.11 @ 09:32
The new lender is also likely to insist on seeing evidence that the existing mortgage on the buy to let property is recognised by the lender as such - in other words you didn't just start off with a normal residential mortgage and then decide to let the property out without telling your lender. A lot of people do this but technically you would be in breach of mortgage conditions.
Some lenders will take the buy to let commitment off your income before agreeing a new loan, some won’t. I suggest you see an independent broker in your area as they will know each lender's conditions and can advise you accordingly.
| 06.17.11 @ 11:58