How much can I borrow on a buy-to-let mortgage?
With standard residential mortgages, a lender will assess your income and expenses to determine if you can afford the mortgage payments. For buy-to-let mortgages the lender will look at different criteria. You may still need to be earning above a minimum criteria, but the mortgage application will be less focused on you and your circumstances, and more focused on the expected rental income.
In simple terms, the mortgage lender will expect a minimum rental income of between 125% and 145% of the total annual mortgage payment, depending on your income tax status.
To work out if you would qualify, consider the amount you expect to receive in rent and use this to work out what the maximum mortgage could be:
You expect your tenant to pay you £750 per month totalling £9,000 per year of rental income
The minimum rental income is 145% of the annual mortgage payment
If £9,000 is your 145% minimum rental income, then the maximum 100% annual mortgage payment is (9000/145) x 100 = £6,206
This works out at mortgage payment of £517 per month
If you cannot find a mortgage product that costs £517 per month or less, then you could struggle to find a buy-to-let mortgage to suit the property.