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  • Buy-to-Let

    What loan to value (LTV) do you aim for?

    Hi all, building a portfolio now, for long term investment and no income for the next 20 years, just letting it build and re-investing.

    What LTV would you be targetting? More properties with higher LTV or fewer with lower? I’m currently aiming for maximum property at 75% but interested in other views.

    many thanks

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    Hi Toby,

    With the new PRA regulations, it is highly unlikely you will achieve 75% LTV.

    Using the formula of monthly rent x 12 divided by 5.5% divided by 145%, which is the typical calculation, will determine how much borrowing the rental income supports.

    See - Ready-made deal stacking calculations 

    Depending on your yield, most landlords will find this reduces their LTV down to around 60 - 65%.

    Your tax position and tax structure will also help you decide your LTV.  Sole traders who are affected by Section 24 would be advised to reduced their LTV further.

    ​Hope that helps for starters?

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    I am a Northern Investor so if I was buying at present I would look for 75%  investing via a company structure

    Personally I would not invest and leverage in my own name due to S24

    25% deposit plus fees & costs is the only way I would go

    I would not Remortgage out to raise deposits


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    Learn Change and Adapt ?????


    What would you do then DL? Service the interest payments only? Pay down the mortgages? Or save all profit for new purchases? Thanks buddy, LC

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    Oh that is a hard one for me to answer

    It has to go on your own plans

    I personally have been effected by s24 so  I have done the Landlord Shuffle

    But I would not be buying now even if It had not come to be honest

    I think at present its time for me to sit and watch

    Manage what I have store some cash and see what our political leaders bring us

    Not really a great answer for you but that's what I am doing


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    Learn Change and Adapt ?????

    I would aim long term  for 100% LTV but you will find that tough if not impossible  in the early years

    You have to bide your time as you build

    Between 10 and 20 years as you re invest releasing equity from capital growth it becomes  relatively easier

    You are hampered by the new PRA rules but they are to protect you as well so pay good attention to them

    You will grow slower as a result but the formula is the same . Borrow to invest

    So maybe 60% - 75% initially if the figures work and you can get the loan

    You get a feel of your own attitude to risk as you go along

    You may get bolder or retreat back a little as you get to know yourself better

    In 10 years a 100K unit you bought today might be worth say  150K .

    You release 20% = 30K and put 25K of that down on another 100K unit @ 75% LTV

    You now on that new unit have achieved 100% LTV

    Have a rolling programme as you go forward and you can reach perpetual motion

    Your approach to risk will determine your max LTV . I was doing 85% LTV regularly if they would lend

    You ask how many should you aim for . That is the trade off only you can decide

    But if 1 property produces a profit you kinda want more not less . I aimed for more not less

    A fellow investor though  may opt for the 50% LTV route . And that`s fine

    There is no right or wrong

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    Jonathan Clarke. http://www.buytoletmk.com


    I’m investing in the NW in properties where rental yields safely secure 75% LTV so my constraints would be through choice rather than necessity. I am also investing through a company and at present targetting 75% LTVs, retaining £25k contingency and then re-investing when profits are high enough to finance another deposit.

    Just wondering if a more prudent view would be to leverage at lower rates. All my mortgages are 5 year fixed at present too to reduce short term risk whilst I establish the business.

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    sounds as if you know what your doing

    all the best DL

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    Learn Change and Adapt ?????

    i Like To mix up 3,5,10year fixes so they don’t all go to svr around the same time!

    apart from that, when you have worked out all the scenarios it’s down to your attitude to risk.

    60% ltv May be risky to some.

    for me I am far more fearful of not fulfilling my full potential,so when I feel fearful I just carry on.



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    I have just got an offer at 75% buying through my company.

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    One other thing to note - if you happen to buy really well example well priced repo at auction where you got lucky as no-one else bid etc, you might have built in equity, you might want to not have a 5yr fix if you'd like to take out some of the equity to refinance and buy another. Sometimes there's higher redemption penalties with longer term fixed rates and with higher LTV so often a trade of for interest rate and ability to refinance wiithout large fees - and this perhaps depends how well you've purchased - or if you add value by layout changes, refurb, extension etc.

    best of luck


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    regards Andrew Peers - property investor / sourcer - 07912674181

    andrewpeers@hotmail.co.uk

    Property Redress Scheme Number 011436     NLA member 174404