Being a landlord has a steep learning curve and for many, it’s not the passive income they perhaps thought it might be. However, once you find your feet as a landlord, it’s common to see it as a career like any other. While some landlords are happy to keep a watchful eye on a single property, there are others who will be keen to expand and diversify their portfolio. Unless you happen to be a millionaire looking for properties in which to grow your money further, this inevitably means searching for the right mortgages.
When you’re an experienced landlord, this means finding good high loan to value (LTV) mortgages that allow them to seize on a potentially lucrative property without having to part with a larger deposit.
What percentage is considered a High LTV Buy To Let Mortgage?
The exact percentage will vary depending on who you ask. However, most will agree that 80-85% LTV ratio falls within the “high” category. Because 90-100% mortgages are no longer an option (sorry to those who miss the early ‘00s), the maximum LTV that investor-landlords can borrow is 85%.
What is the advantage of an 85% LTV mortgage?
Not all investor-landlords are able to secure an 85% high LTV mortgage. They need to be able to demonstrate experience to lenders, although in some cases 80% LTV mortgages can be granted to investors without previous landlord experience.
Because they don’t have to invest as much capital on a deposit for their property, landlords have more in the kitty to ease cash flow so that they aren’t caught out if one of their investment properties develops a plumbing leak or other fault that affects the tenant.
Investors can also choose between interest-only or capital repayment mortgages at 85% LTV.
What are the lenders’ criteria for High LTV Buy To Let Mortgages?
As you might imagine, these can vary depending on the lender. However, lenders usually expect applicants to meet the following criteria;
- Applicants must often be between 25 and 75 years of age before the end of the term (this may not apply to very experienced landlords)
- A minimum loan size of £50,000
- A loan term between 5 and 35 years
- Applicants meet credit record requirements
- Documentation will be required to verify the applicant’s income, identity and address
- Multi-units mortgages can be considered, with more than one apartment under the same title
- A maximum of 8 bedrooms (although there are some exceptions)
- Planning permissions (where applicable) must already be in place
Getting the most out of your High LTV Buy To Let Mortgage
A high LTV buy to let mortgage can provide much flexibility for an experienced landlord, but by no means is it always the best solution.
It might be more suitable for you to raise capital from your existing portfolio to minimise your personal risk and putting down a lump sum that is manageable while still ensuring that the property meets your requirements.
If you’d like to talk to us about High LTV Buy To Let Mortgages don’t hesitate to get in touch today.