Mortgage/Loan based on rental income & property you own outright?

[JG0009]

Suppose for example somebody was given €150k from a parent to buy an apartment & they now own the apartment in their name.

Would they be able to get any sort of a loan/mortgage to buy another similar property at all based on the rental income of the apartment and the apartment itself as security?

They may even have 10 - 20% the price of the second property price in mind, but the only regular income the would have is from rent on the first apartment.

The second property would be being bought with the intention of letting it.

(They are aware if they are letting it the would be liable for CGT if they sell it etc)

Thank you.

 

[Sarenco]

I suspect all banks would heavily discount the projected rental income (if they take into account at all) in assessing affordability so I doubt this would be a runner.

In any event, when you look at current RIP mortgage rates, achievable net yields and the fact that 25% of interest payments are not deductible for income tax purposes, the numbers for a leveraged residential rental property almost never make sense for an individual.

 

[Monbretia]

No 1 criteria for lending is ability to repay and not additional security so they will be more interested in income than giving them another property as security. The additional security is only valuable if they have to sell it which is a lot of hassle, the lender wants steady income from loan repayments so your income is more important to them. As above they will probably discount the rental income a lot so whether or not you will have enough left to secure is loan is the question.

 

[cremeegg]

when you look at current RIP mortgage rates, achievable net yields and the fact that 25% of interest payments are not deductible for income tax purposes, the numbers for a leveraged residential rental property almost never make sense for an individual.

Unfortunately, this appears to be true. Is there any RIP mortgage available at less than 5% at the moment

 

[Sarenco]

I believe Ulster Bank offer a variable rate of 4.6% on investment properties with an LTV of less than 60%. I'm pretty sure that's the most competitive RIP rate at the moment.