I want to get a buy to let mortgage but have only been back in the UK for 12 months before that I was living and working abroad.
Most buy to let mortgage lenders have got a ‘two or three year UK residency rule’ whereby they expect the applicants to have been living and working in the UK without break for that duration prior to application. This makes matters complicated especially if somebody has decided to come back from working abroad and is looking to find a suitor for their buy to lets.
The good news is we have access to a handful of lenders that buck the norm and will allow the applicants to get a buy to let mortgage even if they’ve only been back in the UK for 12 months. The rates are pretty good and the rest of the criteria; including standard rental calculation, is in line with the rest of the market.
Qualification Rules
Below I will run through the qualification for a buy to let mortgage for British Nationals that have only been back in the UK for a short while in more detail:
- Owner of a property to qualify for a buy to let
In addition to the buy to let property most Lenders want you to own the UK home you live in. Others are less restrictive and simply want you to have owned a UK property usually for at least 12 months. - Minimum income for buy to lets
There’s a distinct disparity between lenders on this underwriting rule which exists to evidence someone has the ability to maintain their lifestyle without taking into account the expected rental income for the property they are mortgaging. A benchmark figure the Underwriters are looking for as a minimum income is normally between £15,000 and £25,000, some Lenders enshrine this figure into their policy and others allow their Underwriters to make their own judgment by not stating an amount at all. Importantly, the devil is really in the detail here and although I will elaborate on in this article I strongly recommend you speak to a Mortgage Professional, such as Niche Advice, if you are in this income bracket.Things to watch out for:
– The minimum income amount could apply to every applicant and not just the main applicant.
– There might be a minimum for the main applicant and a separate overarching minimum for joint applications.
– The income might have to be derived from one source.
– The income may have to be from ‘an occupation’ and does not allow for rental income to be factored in.
– Just because a Lender does not state a minimum does not necessarily make acceptance easier as the onus is then on a human being (Underwriter) to make a judgement.
– Lenders have different interpretations on what constitutes a committed outgoing when determining lifestyle affordability. - Rental calculations for buy to lets
The bedrock of buy to let mortgage underwriting is the expected rental income in relation to the mortgage payments, again there is a disparity between Lenders on policy when determining the surplus between the two to make the buy to let mortgage affordable. Again this is a minefield so speak to your Mortgage Advisor.Things to watch out for:
– Lenders might work off the existing tenancy figure rather than the open market assessment. This can be particularly tough on Landlord’s returning to the UK who might not have had the opportunity to reset their charges to the tenants.
– The percentage of coverage can range from 125% to 150%.
– The coverage might be on the chosen repayment method of the mortgage so if the loan is capital and interest the rent will need to be that much higher.
– The interest rate used when calculating the coverage might be higher than the product rate to allow for rate rises (stress tested).
– Longer term fixed rates may provide a better coverage factor.
– The Lender might apply the coverage factor to all your buy to let mortgages and not just the one you are taking with them.
If you have been working abroad and are now back living and working in the UK and want to get a buy to let mortgage, please complete the online enquiry form on this page alternatively call us on 0207993204.
Author: Payam Azadi
Payam Azadi is a partner at Niche Advice who are whole of the market Independent Mortgage Brokers. His role is very much focused on Property financing both on residential and commercial lines. To get in contact with him please click here.
