Let’s explore a case I recently completed on – a buy to let high loan to value mortgage. My client, a successful asset manager, was purchasing a new property which she intended to keep as an investment and rent out as a buy to let to subsidise her income.
The property was in central London and the purchase price was £900,000. My client needed a buy to let high loan to value mortgage of £600,000. At this level that meant she required borrowing at 65% loan to value.
My client’s main residence was unencumbered and she had a provable income of c. £300,000 per annum. However, lenders have ‘rental calculations’ that only allow a certain level of borrowing regardless of loan to value. In London the rental yield is usually quite low because the property values are so high and in this case was not sufficient to cover the amount my client needed to borrow.