How do banks lend money for investment property?
When lending for investment property, lenders usually look at the rental income that can be generated from the property, not your income. Let’s say that a property commands a rental income of £1300.00 per month, then the lender would be happy to lend a mortgage (usually up to 85% of value) providing that the rental income is 1.3 times the mortgage payments. ( so that would be £1,000 in this example) Top…
A. When lending for investment property, lenders usually look at the rental income that can be generated from the property, not your income. Let’s say that a property commands a rental income of £1300.00 per month, then the lender would be happy to lend a mortgage (usually up to 85% of value) providing that the rental income is 1.3 times the mortgage payments (so that would be £1,000 in this example).
Their system is simple: rental income. Not your own income or the value of the house, but the rental income that the property can generate. Take for example this scenario: if a property can command a rental income of £1,300 per month, your lender will be more than happy to lend a mortgage (usually up to 85% of the value) providing that the rental income is 1.3 times the mortgage payments. In this case that would be £1,000. If you can give them the profit, they will give you the loan.
