BUT TO LET MORTGAGES
EXPERT BTL MORTGAGE BROKERS
Specialists in Buy to Let Mortgages
If you are buying your first Buy to Let property, expanding your portfolio or re-mortgaging for a better rate, Our dedicated Buy to Let team are waiting to find you the best Buy to Let deals.
Portfolio Landlords Welcome
New Landlords Welcome
Limited Company Buy To Lets (SPV)
Holiday Let Mortgages
No Minimum Income Required
Interest Only Options
Your Situation Is Unique
So Is Our Advice.
There has been an increase in demand for rental properties over recent years, It has become very popular for people to purchase property as an investment or choose to rent out their existing property. The Mortgage Hive has a keen interest in helping you maximise the return on your property. However large or small your property portfolio our friendly, professional advisers will help guide you through the mortgage process & find the best mortgage to suit your needs.
Buy To Let Mortgages, Free expert advice from our experienced brokers
If you have a property that you are currently renting out, or if you are looking to become a landlord to bring in an additional income stream, it is likely you will require a Buy to Let mortgage (BTL)
Your ongoing mortgage payments are likely to be the biggest ongoing cost for your rental property. Obtaining the best mortgage rate is key to maximising your net profit.
Below we will explain the difference between a BTL and Residential Mortgages. When you need one and how lenders check eligibility and affordability.
What is a buy-to-let mortgage?
Essentially, a Buy To Let mortgage is a loan against a property which you are currently or intending to rent out to tenants. Unless you own the property outright, you will not be permitted to let the property for profit without a buy to let mortgage.
Whether you rent the property as a residential home, student accommodation or holiday home, you will need a Buy to Let mortgage.
You may need a buy to let mortgage if you:
- Own or purchasing a property to rent out for an additional income stream.
- Buy a holiday home intending to let out.
- You have become an accidental landlord via a change in circumstances, i.e. struggling to sell or inherited the property.
What’s the difference between residential and buy-to-let mortgages?
A Buy to Let Mortgage will assist you to purchase a property that you intend to let out to other people; you will not be a permanent resident of the property. If you intend to live in the property, you need a residential mortgage.
Buy to Let mortgages are commonly interest only loans, your monthly payment will not be repaying the borrowed funds, the initial balance will not reduce over time. You will need to consider how you will settle the outstanding debt at the end of the term.
I.e., Sale of Property, Refinancing the mortgage, Investment, Savings etc.
Residential mortgages are typically capital repayment. The monthly payments comprise of repaying some of the capital borrowed along with interest charges. Over the mortgage term, the amount you owe reduces.
Affordability is calculated differently for a buy to let compared to residential mortgages.
When assessing the affordability for a Buy to Let Mortgage, lenders will consider the rental income to determine if the rent is sufficient. Your personal circumstances will also be taken into consideration. For Residential Mortgages, lenders will assess personal circumstances, income, credit commitments & living expenses for.
How much can you borrow for a buy-to-let mortgage?
Lenders will assess the amount of rental income you currently receive/ or expect to receive, to make sure it meets their requirement.
This will be dependent on different factors, e.g.
- The Individual Lender, as some require more rental coverage than others
- The amount of Tax the Lender expects you to pay on the rental income
- Whether you will lock in for a 2 Year or a 5 Year Fixed term. (Lender generally offer less stringent rental stress test on longer fixed deals)
If the rental coverage is sufficient, it may be possible to borrow up to 85% of the property value. The majority of lenders will consider lending up to a maximum of 75%.
What deposit is needed for a buy-to-let mortgage?
Currently the minimum deposit needed for a Buy to Let Mortgage is 15%. However, most Lenders will require a minimum of 25% deposit. You may require a larger deposit if the rent does not cover the loan size required.
You may be able to fund the deposit using equity from other BTL properties or your residential home.
The larger the percentage of deposit you put into the property, the lower the rate you will achieve due to increased lender competition.
Are there minimum income requirements for a BTL mortgage?
We have access to a range of lenders with no Minimum requirement. Lenders each have their own criteria regarding income, it varies from £0 up to £40,000 for some portfolio Landlords.
The Lender will want to be comfortable that you have the income or savings to cover your living expenses and any potential rental voids.
At the Mortgage Hive, our expert mortgage advisers will match your personal circumstances, with the individual lenders criteria to make sure we find you the best Buy To Let mortgage deal.
Can adverse credit applicants get a BTL mortgage?
The Simple answer is YES, you can get a Buy To Let mortgage with adverse credit. A history of bad credit could reduce the number of lenders willing to lend, the products available, competitive interest rates and the terms of the loan which you may be offered.
If you have had any credit issues in the past. It is always best to get tailored advice from one of our advisers at the Mortgage Hive. In the first instance, we would recommend you download a copy of your credit report for us to review.
The 3 main credit Agencies are Experian, Equifax and TransUnion. We would suggest you get a copy of your credit report from Checkmyfile as it will check all these agencies for you.
When reviewing we need to consider many factors. Such as, the type of adverse credit and when it was registered. The more recent the issue, the fewer Lenders will consider your application, we may have to look at Specialist Lenders.
Get in contact with one of our mortgage advisers to discuss your personal circumstances and requirements in more detail.
Can you get a buy-to-let mortgage as a first-time buyer?
Yes, there are a small number of Lenders that offer Buy to Let Mortgages to First Time Buyers who are First time Landlords. In most cases, the Lender would need to check the mortgage is affordable without rent by assessing your personal circumstances, income, credit commitments & living expenses.
The majority of mortgage lenders require the applicants to already be homeowners. However, if you have previously owned a property and now live in rented accommodation, we have Lenders that will consider your application.
The Mortgage Hive will be able to discuss your situation to help you choose the right lender regardless of your experience.
Will my age impact my BTL mortgage eligibility?
Between the ages of 21 and 70 there isn't a noticeable impact on eligibility.
18-21 and over 70 reduces the number of Lenders that will consider a mortgage application.
The Mortgage Hive advisers can talk you through the Lenders that will consider an application and show which product options may be open to you.
Is a BTL investment right for me?
It could be. Everyone has different circumstances, finances & expectations of what being a landlord will involve. If you have researched the market and think becoming a landlord would be right for you, contact us to discuss your options.
The Mortgage Hive are whole of the market mortgage brokers, our advisers have vast experience with Landlords. Even though our advice is tailored around the mortgage advice, we are happy to offer guidance and experience so you can make an informed decision.
Advantages of buy-to-let mortgages
- Increase in Property Price / Long Term
Property prices continue to increase, in recent years they have offered great returns and continue to be a good investment opportunity. Having property as a long term investment can be very profitable. Property prices generally go up year on year so if you intend to keep your BTL long term, you are likely to see a healthy return
- Strong Rental Market
There is currently a high demand for rental properties, the price of renting has increased, this makes the prospect of becoming a BTL landlord very attractive.
Disadvantages of buy-to-let mortgages
It may appear that becoming a landlord is an easy way to make money. Of course there are downsides to consider, some of the challenges you may face are listed below:
Buying the Correct Property
You will need to consider the type of property and location of your BTL purchase, a property which isn’t attractive to tenants could be difficult to let, an empty property will eat into your profit.
Any Buy to Let mortgage provider will also want to see it has demand for future tenants and marketable, should you wish to sell.
Tenant-related risks
Tenants failing to make rental payments or causing damage to your property is unfortunately a possible risk to all landlords. This will affect you financially, but there are insurances you can take out to help minimise the impact this could have on you.
Stamp Duty
You will need to factor in Stamp Duty Land Tax (SDLT) when budgeting for your BTL Mortgage. SDLT for Buy to Let properties is an extra 3% in addition to the standard rate bands which are payable on properties over £40,000.
Long-term market uncertainty
Currently there is a high demand for rental properties, this could change in the future. Mortgage rates could also fluctuate , they have been at an all time low in recent years, but any rise in the rates will affect your return on investment.
Capital gains tax (CGT)
If you were to sell your buy-to-let property and make a profit.
You may need to pay Capital Gains Tax (CGT). This is a tax on the profit made from the investment. You will get an allowance. however, anything above the allowance you will have to pay CGT dependant on your income tax banding.
Why speak to a specialist buy-to-let mortgage broker?
An Independent whole of the market Broker will be able to advise you on the pitfalls and benefits of becoming a buy to let landlord. You will need to consider if your circumstances suit being a landlord and if the investment is the right thing for you.
The Mortgage Hive will be able to explain the process of purchasing a BTL mortgage & explain to you the possibility of fluctuations in future rates and how this could affect you.