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The first thing to understand is that buy to let property can be purchased relatively simply and with little regard to your personal income, unlike a normal mortgage for your home. It is more concerned with the quality of the investment property itself and whether it is likely to provide enough income to pay the interest or repayments on the loan.

When you are looking at an investment property for the first time it is important to consider the level of rental income you expect to receive compared to the cost of the mortgage per month. Historically lenders have expected the expected rental per month to be 130% more than the mortgage cost or better in order to allow you enough extra income to cover rental management charges and so on. For example if you had a property with a rent of £800 per month you would be allowed a mortgage cost per month of no greater than 800 / 1.3 or £615 per month. More recently however lenders have become more flexible and now permit as little as 100% interest cover so your forecast rent could be the same as your mortgage cost. Unfortunately, after management costs and any void months when you cannot find a tenant, you will run a loss on these types of loans so if you are keen on easily covering the mortgage then the secret is to hunt out property that has the highest rental income compared to the price of the property.

Banks normally need a minimum deposit of 15% on a buy to let property to be put down but if the interest cover requirements are not met then you will have to put in a bigger deposit to reduce the size of the mortgage and hence fit the interest cover. Nowadays developers are very keen for more sales and it is quite possible for us to negotiate to get a 5% deposit paid by the developer and even obtain a rent guarantee for a short period when offering them many sales as a result of this within a couple of weeks.

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