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Ever fancied becoming a landlord and letting a property? Property development can be very rewarding, though there are ways and means around getting a great deal.
Buy-to-let mortgages are often a great way of taking advantage of competitive interest rates and repayment options to suit your portfolio.
Suppose it’s your first foray into becoming a landlord. In that case, you should consider looking at your options with a local, flexible advisor who can help you find the best possible options available in the surrounding areas.
You’ll need to consider whether this type of mortgage is right for you and what you want to do with the property.
After all, becoming a landlord is a long-term commitment! It can reap serious financial dividends in the long run, but there will be several laws and regulations you’ll need to get your head around.
With the help of a nearby advisor or team of experts, you’ll soon be able to negotiate the red tape and find out whether or not there are any deals which fit your current finances and your long-term plans.
Buy-to-let mortgage deals can be compared online and entered into at your leisure. However, without the backing of an experienced advisor near me, you may be at risk of entering into a deal which doesn’t represent your interests in the long run.
To avoid getting tied into buy-to-let mortgages that don’t work for you, you should always be willing to seek help and advice from seasoned experts.
With all of this in mind, what can affect the BTL mortgage rates you may be able to receive? There are several factors which will be taken into account during a property search and extensive applications.
Factors which can come into play include:
This is only really the tip of the iceberg. Over 150 different laws and pieces of legislation can affect your ability to take on a BTL mortgage and your ability to let tenants.
Therefore, it makes sense to prepare as much before you start putting any money down and before you start getting into any specific deals or negotiations.
Don’t worry – we will always make sure you are fully prepared each step of the way.
The following criteria will determine whether you are eligible for a buy-to-let or not:
On average, most lenders look for a minimum income of £25,000 to successfully apply for a buy-to-let.
Buy-to-let mortgages tend to require a higher deposit than residential mortgages.
For example, the standard maximum LTV for a buy-to-let property is 75% to 85%. So, your deposit will need to be at least 15%.
If you have a poor credit history, you may struggle to find a lender that will offer buy-to-let mortgages to you.
On average, the minimum deposit for a buy-to-let property is 25% of the property's value.
For example, if your property is worth £100,000, your deposit would need to be £25,000.
Many buy-to-let mortgages are interest-only, meaning you only have to pay monthly interest, not capital.
Then, you must pay the loan balance in full at the end of the mortgage agreement.
The maximum amount you can borrow for a BTL mortgage is based on the rental income you plan to receive from tenants.
For example, lenders may require the income for rent to be 25 to 30% higher than your monthly mortgage payments.
You can use a BTL mortgage calculator to estimate the amount you can loan.
To apply for a buy-to-let loan, the following must be true:
If you are unsure of what restrictions your lender implicates for their loans, then speak with one of our mortgage advisors, and we can find out on your behalf.
Mortgage lenders may decline certain properties if they need complete refurbishments to make them liveable.
For example, your buy-to-let mortgage may be declined if a property does not have an actively working kitchen.
Properties that are not brick-built may be difficult to obtain a BTL mortgage for, such as barn conversions or wooden property.
Certain lenders may be limited to certain areas of the UK; they may decline mortgages for properties outside their jurisdiction.
Using a BTL mortgage calculator is a great idea. After all, several financial factors will bear on your way to becoming a landlord.
You'll need to consider the value of your property, how much money you are willing to put into its development, how much you can pay as a deposit, and how much you can or should be charging in terms of rent.
Ideally, you should be looking at a reasonable rental yield of about 4-5% of your property value – but that isn't to say this will fit all circumstances and property profiles!
We are the closest support network many landlords have when setting up a buy-to-let mortgage for the first time. We help to support prospective landlords with a wide range of options.
While your personal and financial circumstances may affect the deals available to you, we always make sure to narrow down the search to deals that comfortably work for our customer's long term.
We always have the future in mind – and you should, too!
A buy-to-rent mortgage can arrive in several forms. These may include:
Once your BTL or interest-only mortgage terminates, you must pay the outstanding balance.
As a landlord with buy-to-let mortgages, you need to remember that there are times when you may not have a rental income or permanent tenants.
You cannot presume that you will always have tenants, so there may be times when you have to pay the rent yourself.
This can be costly, so you must plan for these events and create savings for use when you don't have occupants to cover monthly payments.
You may even have to repair boilers or other damages within the property.
Some landlords choose to sell their property for profit and to pay off their loans.
However, this can be risky; if the house prices have dropped since you bought the property, you might be at a loss.
In this situation, you will need to cover the remaining cost with your own funds.
The best buy-to-let mortgage deals aren’t necessarily those which are widely available to compare online.
With the assistance of a nearby home loan advisor or expert, you can narrow down the market and see what BTL deals are best for you.
We always recommend that you seek support from a qualified expert who will be able to help you narrow down the market.
Finding a buy-to-let mortgage deal which can help you reap dividends from future rent isn’t always easy. There will be financial plates you’ll need to keep spinning!
Therefore, do always keep an open mind and take your time when it comes to surveying the market. We’re here to help!
If you want to purchase an HMO or multi-let property, you may need to find a specialist lender.
Most buy-to-let mortgages are aimed at single-let homes with an assured shorthold tenancy AST.
You will likely face higher interest rates and mortgage repayments for properties that are multi-let.
The employment status of your permanent tenants can impact your BTL mortgage deal.
If your tenants are working professionals, brief gaps in their employment may not be an issue; however, your mortgage provider may have an issue if your tenants are students or on universal credit.
Most lenders for buy-to-let properties are only available to UK residents.
Due to restrictions, it may be hard for anyone living abroad to access a buy-to-let loan in the UK.
Expats based in other countries are considered high-risk, so lenders tend to avoid them within the rental property market.
Tried BTL mortgage comparison sites? Coming up short? Get in touch with a local advisor who can offer you specialist knowledge and care based on your exact needs and projected dividends.
Fill in our contact form to set up a consultation at your convenience.
Becoming a successful landlord starts with finding the best BTL home loan, so get in touch now!