Rental Income

The rental income generated from the buy to let property should exceed the interest only mortgage payments. Some lenders require the gross rental income to exceed 130% of the mortgage payments but once again this rental cover requirement has generally got lower in recent years and you will often see rental coverage of 125%, 110% and even 100%! This is probably the most worrying trend in recent times as the original purpose of such rental income to debt ratio was to ensure the landlord could pay the mortgage in the event that the Bank of England raised interest rates and/or the property was unoccupied for long periods. With the reduction specialist Landlord Insurance has emerged where rent protection insurance (rent insurance) has allowed landlords to protect themselves against the property being unoccupied and not let for significant periods of time. And lets not forget that the traditional Letting Agent could charge you between 8% and 16% to let your property (see Letting Agents for rates as low as 3% to let your property).