Three model houses with signs on which say: 'Buy me', 'For sale', 'Best deal'

Category: buy to let mortgage guides

Whether you are investing in property for the first time, or researching other property types from those in your existing portfolio, find out how much you can borrow, by property type. Plus, if you haven't got a cash deposit, we share how you can raise one from other property you own! 

Watch our video guide below for up to date information on current loan to value thresholds across standard buy to let mortgages (in personal name or via a limited company), holiday lets, short-term lets and Houses of Multiple Occupation (HMOs).

 

Video guide transcript: Buy to let deposits by property type and raising a deposit without cash

"When you're investing in property, you probably want to understand just how much you can borrow of the property value that you're looking to purchase.

On a standard buy to let property, or if you're investing in a property via limited company, you can borrow up to 85% of the property value.

If you're investing in an HMO (or a House of Multiple Occupation) it's also up to 85% of the property value, which means if both instances you need a minimum of 15% deposit.

On a holiday let, it's a little bit lower at the moment, you can borrow up to 80% of the property value.

Now, if you're struggling to raise a deposit in cash, there's another way that you might be able to raise funds and that is, if you own other property, that's got a reasonable amount of equity in it.

If you own, say, your house with a mortgage or without, or if you own another buy to let property, or a commercial property, or semi-commercial property, and there's equity within that property, you could borrow against the equity in order to raise deposit and reinvest in another property.

There's a few ways you can do that. The first way is to remortgage that property and increase the loan on the property, use that extra amount and put it down as a deposit on another property.

Or, if you're in your Early Repayment Charge period of your initial rate deal on the property you're looking to raise capital from, you could put a second charge on it.

That means that your existing mortgage isn't touched, but you can still raise equity out of the property. You'll need permission to do a second charge from the primary/first lender on the property, but that is another option for you.

The third option is a cross-charge and there are some lenders who will just put a charge over the security property, not actually put a product in place that will extract the money. And in that way, that is how they're protecting the deposit.

So, those are the three options that you can use.

If you want to raise a deposit and certainly when it comes to interest rates, the more you can put in as a deposit typically the more competitive the rates will be. And that's because the lender is taking on a lower level of risk the more deposit you're putting in.

I hope that's useful. And if you want to discuss investing in property, call our advisors today."