Published 29 July 2012 · Last reviewed 11 November 2015 · Older article — see current rates
Buy to let mortgage no minimum income required
Surely no one would purchase a buy to let property without savings in the bank for essential repairs and to cover periods of vacancy? Yet strangely this is what the UK buy to let lenders would have us believe.
How so? Well virtually all of them insist that buy to let applicants have PAYE or self-employment earnings separately from the rental yield. This blanket rule approach is fundamentally nonsensical, for instance you might have a property that has a mortgage payment of £200 and you are receiving £1,000 in rent so the reserve for maintenance is self-perpetuating.
It’s hard to fathom why employment is so important. Let’s face it, who would buy a property that is not self-financing? Even the hardened of buy to let landlords that I deal with daily rarely take a view on capital appreciation without the comfort of knowing that the mortgage payments are covered until their ultimate objective is realised.
As you may expect Niche Advice has, however, found a buy to let solution that is not dependent on earned income. It is open to anyone from age 21 to 70 years that already owned at least one other Buy to Let property which has been rented for the last 6 months so not for First time Landlords. The deposit for this buy to let solution can be as little as twenty percent, however, I would recommend that you contribute more as even an extra five percent improves the terms substantially. Your income can be derived from any job, even if you have just started, Alternatively, it could be a pension, and buy to lets can be an excellent way to supplement income in retirement particularly as savings rates are so poor at the moment and equities volatile.
The rental cover is the key underwriting component and the lender will need to know that there is a surplus yield of twenty five percent above the mortgage payment, i.e. if your mortgage payment is £1,000 a month there must be a rent received of £1,250 but this rule will be very much depended on the loan to value of the case.
Although some lenders do not require proof of income from professional landlords for Buy to Let Mortgages, the mortgage should be affordable to you in sustaining your current lifestyle and therefore income documentation will be taken into consideration for compliance purposes to ensure the viability of all mortgages recommended by Niche Advice.
Payam Azadi is a partner at Niche Advice Ltd who are Independent Financial and Mortgage Advisers in London.