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Buy To Let Mortgages

Getting the right buy-to-let mortgage will ensure that you get the most appropriate deal for you and your investment.

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A buy to let mortgage is designed to support the purchase of a property to rent it out. Buy to let properties can vary from houses and flats to house share arrangements. Similarly, the types of landlord that chose to apply for a buy to let mortgage – and who the lender decides is eligible – do vary also vary. Both those that own one property and those that own a number of properties may be eligible for a buy to let mortgage.

The rules and regulations regarding buy to let mortgages are set out by the Prudential Regulatory Authority of the Bank of England, who regulate the majority of lenders that offer buy to let mortgages. These rules have changed substantially in recent years, and therefore obtaining the correct advice from an experienced broker in this complicated market is of enormous importance.

Buy To Let Mortgage Calculator

See How Much You Can Borrow

Use our buy to let calculator to get an indication of the buy to let mortgage that you could achieve. This interactive facility gives you the chance to understand not only the amount you could borrow, but how other factors – such as the rent received, your tax bracket, duration of a fixed rate deal etc – will impact this figure.

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Best Buy To Let Mortgage Deals

As with all types of mortgages, the best deals and rates available differ based upon individual circumstances, lender’s criteria and the type of property in question. It is not uncommon, however, for buy to let mortgages to be available with an interest rate available between 1% and 2%.

Depending upon the size of the loan it may be more appropriate to select a deal with a higher interest rate, in order to reduce the amount of fees charged, such as arrangement fees, booking fees and valuation fees.

Buy To Let Mortgage Brokers

The benefits of using an experienced buy to let mortgage broker are numerous. With such a vast marketplace it can be difficult to know where to start. Nowadays, because lenders’ criteria is so complex and varied, there is no such thing as an “easy case”, and what one lender deems as being “bad risk”, another will gladly accept.

Our in-depth knowledge will navigate this difficult market and also find the cheapest, most appropriate deal which can save hundreds if not thousands of pounds.

Buy To Let Remortgage

Buy to let mortgages are no different to residential mortgages, in that most deals offer an initial interest rate which expires after a certain period of time. An example of this is fixed rates, which often differ in length from 1–10 years. At the end of these deals you will usually automatically revert to a higher rate, such as the lenders standard variable rate, at which point the monthly payment would increase (often dramatically).

Remortgaging prior to the end of the deal ensures you remain on the most suitable and cost-effective deal available. A new lender will often pay for associated costs, such as a property valuation and legal fees, and remortgaging can also provide an ideal opportunity to raise extra money for a variety of purposes, such as:

  • Consolidating debts
  • Carrying out home improvements
  • Providing the deposit for a further buy to let property purchase

Buy To Let For First Time Buyers

Whilst many lenders will only provide a buy to let mortgage to customers who are existing homeowners (such as residential property owners, existing buy to let landlords), there are lenders who will consider lending to first time buyers. This is often in circumstances where an individual has access to a large sum of money and wishes to invest this into property, but may not wish to live in the property. This could also be for younger borrowers who have substantial funds from savings or inheritance, but are not ready to leave the family home. Alternatively, those in tied accommodation (where accommodation is provided as part of employment) may wish to get onto the property ladder. Criteria may differ from more “traditional” buy to let circumstances, but a brokers’ experience and expertise can help to find the right solution.

Bad Credit & Buy To Let Mortgages

Bad credit (sometimes called adverse credit) takes many forms, such as late payments on credit commitments – such as loans, credit cards and mortgages – along with more serious circumstances, such as defaults, county court judgements, individual voluntary arrangements (IVA’s), debt management plans (DMP’s), bankruptcies and repossessions.

For borrowers who have had an imperfect credit history, the buy to let market can seem an impossibly daunting proposition. There are, however, a growing number of lenders who will lend to borrowers who have had some form of credit problem in the past.  The individual circumstances will be of key importance, such as the size of the debt involved, the seriousness of the problem and the time that elapsed since the problem occurred. A specialist lender may charge a higher interest rate and/or fee due to the complex circumstances, but often this type of arrangement can be used to help repair an applicant’s credit history in order to return to a mainstream, high street lender in the future.

Buy To Let Mortgages for Limited Companies

Due in part to recent taxation changes, a growing number of applicants are opting to purchase a buy to let mortgage for a special purpose vehicle, like a limited company. Simply put, an individual incorporates a company specifically for the purpose of purchasing and then renting out a property. There can be numerous reasons for doing this, often for mitigating taxes such as income tax or inheritance tax. You should always seek advice from a specialist tax adviser to see if this is the right option to take, but if it is then there are an increasing amount of lenders who will consider offering a mortgage to a limited company rather than in a personal name.

Mortgages for Houses in Multiple Occupation (HMO Mortgages)

Unlike typical situations where a single tenancy agreement is in place for one household, HMO’s are properties where at least three unrelated people rent a bedroom in a property and share common facilities such as the kitchen, bathrooms and living rooms. Often found in larger cities or with student lets, the combined rent received is often much higher than would be available with a single household. Additionally, the individual rent paid by each tenant is often lower than would be the case than if they were not sharing common areas. Whilst many lenders are unwilling to offer HMO mortgages, there are lenders who, under the right circumstances, will consider lending to the right applicant.

Mortgages for Portfolio Landlords

Portfolio landlords are defined by the Prudential Regulatory Authority as being borrowers with four or more mortgaged buy to let properties. For these types of borrowers, additional checks have been put in place which are designed to ensure a borrower’s financial situation is suitably stable. This takes into consideration a number of factors, not just in relation to a borrower’s personal income and expenditure, but also the details of the borrower’s existing property portfolio, including:

  • Overall experience as a landlord
  • The total rents being received
  • Mortgage payments payable
  • Cash flow from a portfolio

As a result of this additional complexity, a number of lenders took the decision to not lend to those considered as portfolio landlords. Of those lenders that do offer mortgages to portfolio landlords, the relevant rules are interpreted in different ways.  This can make it difficult to match the applicant to the right lender, hence highlighting the need for expert advice.

Let’s Get Started

Get in touch with your local branch and speak to one of our experienced advisers. They will be more than happy to go over all of the above and more. Buy-to-let doesn’t have to be complicated. Let us do the hard work for you.

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