Would Getting A Loan For A Larger Deposit Ruin Chances Of Getting A Buy-to-let Abroad?
20. Feb, 2010 
3 Comments
I’m currently earning just over £12,500/year. And can afford £130/week (currently saving). And I have £3,500 saved currently. I want to purchase a property abroad for investment purposes (probably Dubai or Bulgaria). The plan is that it will be a buy-to-let mortgage. And I plan to purchase a property worth about £50,000 – £60,000. However the minimum LTV is usually 80%-85%, meaning I’d need about £10,000-£13,000. I don’t necessarily want to wait a year and miss out on opportunities, so would me borrowing money (maybe £5,000 – £8,000), would that ruin my chances of getting a buy-to-let mortgage?
I have option of securing my parents & their home (worth between £250,000 – £300,000) as guarentors. My father still has a mortgage on his home of approx £25,000.
Yes, if you get a loan to pay the deposit, you’ll have to borrow less, because they take your debts into account in their affordability test. For example, if you get a 10 grand loan and pay say 200 a month off that, the mortgage company will figure that’s 200 you can’t spend on the mortgage.
Also most mortgage companies want you to sign a document to say you didn’t borrow any money to meet your deposit. I know i did when I bought my property. I think the guarantor option is the best.
My best advice to you is to see an independent financial advisor (not one affiliated to any bank) and he’ll be able to tell you the best options and also find a good buy-to-let mortgage for you. You don’t have to pay anything, as they get commission from the company whose mortgage you end up with, but they’re legally obliged to give you the best deal.
When they work out the amount to lend you on a mortgage they use any outstanding loans in their calculation and it will reduce the amount they will lend by more than the loan’s value as it will generally be a higher interest rate and need to be paid back quicker than a mortgage. If you can get the loan in someone else’s name you’ll be OK or find a lender who can offer a higher percentage mortgage amount.
Any debt that you have does make a difference to getting a mortgage. Unless you get someone else to borrow it for you…….?