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Good afternoon folks
Just to give you an update on my situation -
I've spent most of this morning going round estate agents & letting agents trying to identify the type of properties and areas which would be profitable as a buy to let.
Having identified my target areas / properties, the next problem is the mortgage. I am not working at the moment!! My wife works part time., so we are severely restricted to the mortgage providers' that would let us take out a mortgage. However, our home is mortgage free.
So, I guess the next thing to do is go round all the mortgage brokers in my area trying to identify the right mortgage to take out.
Would you agree with that? I suppose it is best to find out what we can borrow before selecting a property?
Most if not all banks will look at your ability to repay the loan. So if your wife is the only one working, then they will look at her income alone.
Banks will calculate what the repayments will be on the new purchase, and deduct typically 70% of the rent that is proposed. It is the difference that you will need to show that you can afford. So even if the property pays for itself from day one, you'll still need to find 30% in the banks eyes.
It is a frustrating situation to be in. i know i could buy a house tomorrow and get great tenants that would cover all costs, but the bank still needs to know what my income is. They are just ensuring that should interest rates rise, or rents fall, then you can still afford the property. Regardless of the fact you have 100% equity in your own house.
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