The Buy to Let Mortgage Experts
The buy to let mortgage market has been on an exciting journey. The market transformed when Irish Permanent shook buy to let up by basing affordability assessment on rental yield. Before this point, buy to lets existed but were often on properties standard variable rate mortgages and income. Irish Permanent went on before becoming known as Capital Homeloans.
The buy to let mortgage market has been on an exciting journey. The market transformed when Irish Permanent shook buy to let up by basing affordability assessment on rental yield. Before this point, buy to lets existed but were often on properties standard variable rate mortgages and income. Irish Permanent went on before becoming known as Capital Homeloans.
In those early days The Mortgage Business innovated the ‘let-to-buy’ mortgage, the onward purchase version worked on the basis of simply deducting 9% of the balance of the buy to let balance when assessing the borrowing potential. Since then:
- BM Solutions (formerly Birmingham Midshires) and GMAC become juggernauts writing massive volumes.
- Preferred, Southern Pacific Mortgages, and Kensington allowed buy to lets where the landlords had poor credit records.
- Mortgage Express allowed day 1 remortgages on new builds.
- My business partner Richard Stokes helped pioneer a 90% self cert buy-to-let with Rooftop.
- Together, Victoria Mortgages and London Mortgage Company lent on the less desirable property.
- Paragon, Sunbank (which become The Mortgage Works) and Whiteaway Laidlaw Bank pathed the way to the new breed of challenger banks that offer multi-let and limited company products.
- Now there are offerings for ExPats, HMOs, Student lets, DSS tenants, holiday lets, AirBnB and vulnerable tenants.
- There are mortgage lenders inside and outside of Prudential Regulatory Authority watch.
- And, 5 year fixes are the flavour of the month as the rental calculations are more favourable.
Frequently asked questions
Q) I’m a first time buyer can I get a buy-to-let as my first property?
A) Yes, a standard buy-to-let is possible but the mortgage lender will appraise the income assessment on the same basis as they would for a residential mortgage. The rental calculation is also looked at. If you want to launch straight into a multi-let or HMO this would not be possible.
Q) If I buy a property for holiday let can I live in it?
A) Some mortgage building societies will allow you to live in the property for up to 60 days a year.
Q) I only receive rental income can I get a buy to let mortgage?
A) Yes, there are Mortgage Lenders will take landlords and will base the affordability on the rental calculation of the portfolio and your tax returns.
Q) What is the minimum lease term on a buy to let flat or maisonette?
A) A large number of Mortgage Lenders look for 85 years left at application. Others 40 to 50 years after the mortgage term expires. We have one major bank that goes down to as low as 25 years left. Properties in the West End or heart of the City could have even shorter leases.
Q) I own a 4 storey house which has been split into self-contained flats can I get a buy-to-let mortgage?
A) If the flats have their own separate leases then the mortgages would normally be separate. The Mortgage Lender would probably want the freehold to be held in a company name and for there to be an arrangement for maintenance/service charges. It is likely that the Mortgage Lender will only want to take on one of them as they do not like too much exposure.
If the flats are just part of the same freehold and just split into units then this likely to be one for the Challenger Banks as a single mortgage.
Q) I’m moving out and want to let my property can I get a mortgage?
A) There are a few Mortgage Lenders that will provide Consent to Let, this is designed to be a temporary arrangement, and is normally only offered if you are inside an early repayment charge.
If you want to make this a permanent arrangement, then you need to take out a buy to let mortgage. If this will make you a first time landlord and then most buy-to-let mortgage lenders will want you to be purchasing an onward purchase at the same time.
Q) Can I let directly to a council or housing association who supply tenants?
A) Most mortgage lenders want you to have a tenancy agreement directly with the tenants. There are a few that will allow this practice but the mortgage terms are generally less favourable.
Q) Can I let to students?
A) As a rule of thumb, a good number of buy to let mortgage lenders will allow up to 4 or 5 students provided they are under one tenancy agreement. If multiple tenancies are in place, then it’s probably one for the Challenger Banks.
Q) My property’s EPC rating is lower than an ‘E’ can I get a mortgage?
A) Yes, we have a couple of buy to let mortgage lenders that will potentially lend, provided you give the commitment to upgrade shortly after completion. The key is the property must be habitable at the point of taking out the mortgage and you need to bear in mind the surveyor will be valuing the property at a level without the upgrade.
Q) Can I get a buy to let mortgage if I’ve had credit problems?
A) Potentially, if the problems are serious then the older they are the better. I suggest you supply your credit report and talk it through with one of our Mortgage Advisors.
Q) What is the minimum deposit I need to out down for a buy to let.
A) For a standard buy to let it is 15% but bear in mind the rental calculation will be worked out on a higher interest rate so the property must have a very good yield.
Q) Can I use a “gifted deposit” towards a buy-to-let mortgage
A) It depends on the mortgage lender. Normally a “gift” from an immediate blood relative is viewed more favourably.
Q) I have inherited a property that is mortgaged and let, can I transfer this in my name?
A) There are a couple of mortgage lenders that will consider this once probate has been finalised.
Q) I have recently bought and done up a property, can I get a buy to let mortgage?
A) Yes, however, if you are looking to increase the borrowing from the current level using the new value then you will normally need to justify the costs spend to refurbish the property. I suggest you talk this through with one of our Mortgage Advisors.
Q) Can I get a buy to let mortgage on a flat above a shop?
A) Yes, as a guide the flat will need its own entrance and 75% loan-to-value can be achieved. If however, the shop beneath or in the block is of an unsociable nature 65% is a more likely outcome. The best step would be to send us pictures first.
Q) Can I sell my buy to let to a limited company that I own, using the equity as the deposit?
A) Yes, normally the limited company must be set up specifically for property purposes. There will be tax implications so you will need to seek professional guidance in this regard.
Q) Do all directors on a limited company have to be a party to the mortgage?
A) If the shareholding is less than 20%, then there are some mortgage lenders that will take a view on this.
Q) Is it right that if I own more than 4 mortgage properties I’m treaded right in terms of affordability?
A) Yes, Mortgage Lenders are generally more stringent on “portfolio landlords”.
Q) I live and work in the UK on a Visa can I get a buy-to-let mortgage?
A) Yes, there are a couple of lenders. Maximum 75% loan-to-value and you must already own a residential property here. You may also be able to be a party to the property if bought as a minority shareholder inside a limited company.
Q) I’m a British Ex Pat, can I remortgage the property I have in the UK into a buy to let?
A) Yes, there are lender options for this type of mortgage.
Niche Advice can arrange all types of buy to let mortgages.
