How to get a Mortgage for a buy to let property
If you’re looking to purchase a property for investment purposes, speak to us about how this can be arranged and how to calculate the amount of the mortgage loan you can get. We can also advise on bad credit buy to let mortgages so you can make an assessment of your likely level of return on investment.
Buy to let, what do I need to know?
There are a number of factors to consider when buying a property to rent out to a tenant.
A property purchased as an investment to rent out to a tenant involves taking out a ‘consumer buy-to-let’ (BTL) mortgage. Sometimes a property can be inherited, and if necessary re-mortgaged in order to rent out.
Deposits for these types of property begin ideally at 25% of the purchase price – however, some lenders will allow a 20% deposit.
Many lenders do not require a minimum income for the purchase of a BTL – they will base their affordability calculations on the potential rental income of the subject property.
Lenders prefer applicants to own (or to have owned) a residential property – however, there are exceptions to this.
Some BTL lenders have no ‘maximum age’ – allowing people to treat a BTL property as a form of income into their retirement.
Those who have 4 or more mortgaged BTL properties are classed as ‘portfolio landlords’, and more stringent underwriting is normally required.
A person’s tax status can also affect affordability – as can whether a 2 or 5 year fixed mortgage is being applied for. Lenders are, in the main, more generous with a 5 year fixed deal.
Buy to let can be complex, but don’t worry, we can help you to plan and make the right choices. Get in touch to make an appointment and we can guide you through the process.
Please note – most buy to let mortgages are not regulated by the Financial Conduct Authority.
Frequently Asked Questions
Affordability factors
Bear in mind a few key points when budgeting for a buy to let property: your deposit will need to be larger than buying a property for you to live in; you will usually pay a higher interest rate and higher arrangement fees than with a residential mortgage; lenders often require that the expected rental income is 125-145% of the mortgage payments. We will help you to budget accordingly – just ask for details.
Plan ahead
Think about the type of property you are aiming to buy and its location: these factors can affect your ability to secure a mortgage and the terms offered. Also consider your long-term goals – do you have an exit strategy? Have a plan for when you want to sell the property or end the mortgage term, and how it will affect your tax position. We provide advice on all these aspects, and guide you through the changing landscape.
Other things to consider
When planning your budgets for a BTL project, don’t forget to factor in all the repair and upkeep costs you will need to pay. Make sure you check all the legal details when you find a tenant, in order to assess their affordability criteria, and external references. Plan for void months, in case there are gaps in between rentals, and tenants moving in and out.
We can help you to understand more about how Buy to Let Mortgages work and if it’s right for you – contact us today to arrange an appointment!
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
For specialist tax advice, please refer to an accountant or tax specialist
