| Loan amount | £4,000,000 |
| New property | £5,600,000 |
| Loan-to-value | 71% |
| Property type | Period family home |
| Location | Richmond, London (TW10) |
| Borrower | Investment banker |
| Structure | Let-to-buy |
| Term | 25 years interest-only |
| Rate | 5-year fixed |
| Lender type | Premier banking + specialist BTL |
The Story
We were approached by an existing client who was looking to purchase a property in a nearby postcode in order to move to a better school catchment area.
He wished to retain his current main residence and let it out.
The Challenge
The client already had mortgage borrowing on his main residence and needed to release additional funds to use as a deposit for the purchase.
Although the rental income was good, high-value single units often do not have a comparatively high rental return on them due to the high value of the unit itself.
The Solution
We approached a lender who could look at a combination of the proposed rental income and personal income when assessing the existing property and the onwards purchase – this enabled the client to maximise his borrowing.
By approaching the same lender for both the buy to let and the main residential mortgage, they became comfortable with the scenario and the overall borrowing position for the client.
Let-To-Buy Mortgages
Fox Davidson is an award-winning team of residential mortgage brokers. To discuss your remortgage funding requirements, please email enquiry@foxdavidson.co.uk or call us on 03300 100313.
Frequently asked questions
How is rental income assessed for a buy-to-let mortgage?
Lenders use the Interest Coverage Ratio (ICR), typically requiring rental income of 125 to 145 percent of mortgage interest at a stress rate. Higher-rate taxpayers in personal name usually work to 145 percent ICR; basic-rate taxpayers and limited company applications usually work to 125 percent.
What deposit do I need for a buy-to-let mortgage?
Standard buy-to-let mortgages require a minimum 25 percent deposit (75 percent LTV). Some specialist lenders go to 80 percent LTV. HMO and MUFB products typically cap at 75 percent LTV.
Should I buy through a limited company or personal name?
For higher-rate taxpayers building a portfolio, a limited company structure is usually more tax-efficient because mortgage interest is fully deductible against profit at corporation tax rates. Setup and accounting costs are higher, so the benefit is clearest from £200,000+ of gross BTL income.
How long does a buy-to-let mortgage take to complete?
A complete buy-to-let mortgage application typically takes four to seven weeks from application to drawdown. Limited company and portfolio cases sometimes take longer where the wider portfolio needs underwriting.
Further reading: large mortgages, investment banker mortgages, buy-to-let mortgages UK, London mortgage guide.
All rates and terms are indicative and subject to individual assessment, lender criteria and property valuation. Your home may be repossessed if you do not keep up repayments on a mortgage.
Buy-to-let, HMO, MUFB, and serviced accommodation finance. Specialist landlord broker.