Gritt23
New member
How does the stress test work?
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[Finance] Buy to Let Mortgages
- Thread starter Renegade1
- Start date
How does the stress test work?
As a guide
basic rate tax payers 5.5% x 125%, ie £ 100000 lending needs £ 573 pm rent
higher rate tax payers 5.5% x 145% ie £ 100000 lending needs £ 665 pm rent
Generic advice, fact find needed to give specific advice
mikeyjh
Well-known member
£665 on £100,000, that's a tough ask in the south east!
Hence my comments on the thread
Presume the £665 per £100k is only on borrowed amount. No one surely Buys To Let without substantial deposit!
So am I right in saying if you have (as is needed with BTL mortgage) large deposit of say 50%. £200,000 property would let for more than £665 month so this would be ok on stress test ?.
As a guide £ 20000 purchase price, £ 50000 deposit - 25%, £ 150000 mortgage
Rent needed with most lenders
basic tax payer - £ 860 pm
higher rate tax payer - £ 997 pm
I`d like you to mis a nought off when I buy a house through you !
Sorry yes £ 200 000 !
Gritt23
New member
So, someone who is a higher rate tax payer can borrow LESS against the same property!? Or effectively, needs to put in a higher proportion of the original cost.
Eg. Property worth £125k, that can earn you £600 pm rent, a basic rate tax payer would have to put in £20k, and could borrow £105k (slightly rounding up). But a higher rate tax payer would have to put up £35k, as they can only borrow £90k.
Really? That seems counter-intuitive, as any differentiation, I would have expected to be in favour of the HR earner, as someone being deemed to have more means to meet any difficulty. But tbh, I'm surprised there's a difference at all.
Tom Hark Preston Park
Will Post For Cash
- Jul 6, 2003
- 70,152
Seems to me the government could solve the housing crisis overnight by forcing swingeing tax penalties on the BTLers and forcing them to dump their 'property portfolio' earlydoors or feel the burn 
Correct
Gritt23
New member
Couple of situations for you Sir.
If my wife and I are looking to do a Buy-to-Let, I'm HR, she's BR, do we make the application in her name and get to borrow more?
What if we do it in joint names?
What if we do it through a business we have formed where we are equal (and the only) shareholders?
Thanks.
mikeyjh
Well-known member
Seems to me the government could solve the housing crisis overnight by forcing swingeing tax penalties on the BTLers and forcing them to dump their 'property portfolio' earlydoors or feel the burn
Do you not think there is a place for a rental sector?
Spot on with every key issue.
Tax point - as a NON ltd co you will gradually over 4 years lose all tax relief on the BTL loan interest and lender charges.
But should a ltd co own the BTL and obviously have the bank loan, the interest and lending fees will receive full tax relief against the company's rental income.
Rest Assured , that youll be helping to ensure that none of the younger generations will ever be able to buy their own property...
Thunder Bolt
Silly old bat
Immigration isn't the problem. Immigration figures also include students who come to Britain to study.
There are too many properties with just a single occupant now. Families used to live as families, but marriage break ups, family splits, mobile workforce have all had the effect of using up property.
Uncle C
Well-known member
The BTL gravy train left the station some years ago. Landlords are now an easy target to raise funds for the Government and house prices are only going one way. Mugs game at present.
- Thread starter
- #79
How?
You know what,there are plenty of my generation also who do not own homes.I'm from an older generation.You want to know why?Because when I was 18 and buying my first house as an investement with my parents,others around my age were spending their money on cars,clothes and entertainment.Many of these have never owned a home or instead own a small flat when they could have owned a large house.As for the younger generation,not quite sure how landlords are freezing them out.There's me thinking it was down to a growing population,houses not being built,plus natural market forces.What do I know.
- Thread starter
- #80
For me property is always the best investment.
Where else can you put your money?Stocks and shares?not for me.