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Buy to Let Mortgage

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I'm just looking at options on buy to let mortgages and I can't see much at a decent rate for anything less than 35% deposit. While I can do this, its a bit of a stretch and I'd like to hold some savings back.

The situation is that my Mum is presently renting a house where she wants to stay, but the landlord is looking at selling. She retired recently and the way I'm looking at it is that I have a long term trust worthy tennant which covers mortgage and upkeep and that if ever in the future my mum needed care then I would have equity in the house to cover it.

I have other businesses so I'm not worried about turning a short term profit on this on the rent I'm just looking to build up equity in the house, but I'd really prefer a half decent mortgage deal on 20% deposit over 25 years. I've checked out Money supermarket etc and I just don't see anything that's floating my boat in terms of mortgage deals.

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Buy to let mortgages are very thin on the ground due to the current financial position and then a hefty deposit is necessary. Too many people had a go at buy to let and defaulted which is one of the reasons it has become tougher to get into the market.

It is all very well saying you have businesses but do you have any cash or collateral - i e any other property that is paid for or with equity in it?

Without this lenders will not look at you favourably. Bide your time until things improve and save hard.

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I believe Mortgage Works do have some buy-to-let mortgages at 80% LTV, however the rate reflects this so you will have to decide if this affordable. Of course I would discuss this with an independent mortgage advisor before making any decision.

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If you have equity in your own property have you considered drawing down on this rather than getting a buy to let mortgage? There are of course risks as it is borrowing on your own property, but the rates are far more favourable. We did this with our first buy to let property, produced accounts to prove income and then were able to draw more down again and get another property. The sums just didn't stack up on buy-to-let mortgages. We also have model of income rather than equity being the main driver as equity increase was the old buy-to-let model and whilst we plan to keep them for 20 years, the pundits are all saying that the increases may be closer to inflation rather than the old higher rates even over the long term. If your mother is of independent means then your idea is a good one if you plan to have a repayment mortage rather than an interest only one, if she isn't and she is expecting contributions from the council, do bear in mind that they ask for declarations about relationship to the landlord and it may make things very difficult.

Wishing you all the best

Fiona

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