From: Ronald Raygun 
Subject: Re: 2nd mortgage advice?
Newsgroups: uk.finance
Date: Sat, 27 Sep 2003 14:07:21 GMT

atka1@dsl.pipex.com wrote:

> Thanks for this. Re the 130% rule, over how many hears is that? Are
> you saying, for example if I was to get 1500 pm (I know that's
> probably not realistic but however), over how many years is that? What
> do you mean by 130% of the rental value? I just want ot know what the
> overall figure would be (and whether or not I could take out some
> equity)?

It isn't "over so many years".  It means that if the mortgage payments
(or possibly just the interest) are £500pm then the anticipated likely
rent (as confirmed by a local letting agent) should be at least £650pm.
It's just to make the lender worry less about the borrower not making
enough money to keep up the payments.

You might think 100% would be enough, but they inflate it to allow for
gaps in rental income, and for other expenses.