Buy-to-Let mortgages are products available for investors wanting to
purchase (or refinance) a property in order to put the property on rent.
We work on a whole of market basis when sourcing the best available
products and rates that meet with your requirements. Whether you're
a first time investor or want to expand your property portfolio, give
us a call and our specialist advisers will be happy to assist you in
any way possible.
There are some factors you should consider when assessing a buy-to-let investment including (but not limited to):
- Homeowner. You typically need to be a homeowner in order to be eligible for a buy-to-let mortgage.
- Your credit history and current levels of debt. Obtaining a buy-to-let mortgage where you have recent adverse credit history and/or large amounts of debts can be problematic. Speak to an adviser in order to assess your likeliness of obtaining finance.
- Age. Lenders typically set an upper age limit of 70-75 meaning you can't be older than this limit when the mortgage is due to expire.
Buy-to-let mortgages are also available on an interest only or repayment basis which can be either on a fixed interest rate or variable interest rate:
An interest only mortgage is where you only repay the interest owing on the debt on a monthly basis and nothing off of the capital. This means that at the end of the term of the mortgage, you will need to secure the funds to pay off the capital balance.
On a repayment mortgage you pay the interest and some of the capital amount borrowed on a monthly basis. At the end of your mortgage term, you'll have paid off both the price of the house - the capital - and the interest on it.
Other factors you should consider (the following is non-exhaustive):
Cost of Mortgage: The terms and associated costs of your buy-to-let mortgage may vary depending on the product you apply for. These costs should be carefully considered in your investment appraisal and/or business plan.
Rent: The total amount you're able to borrow is very much dependent on the potential rental income of the property. The lender will make a judgment on this however it is important to do your own research to ensure realistic figures have been used when completing your business plan and/or investment appraisal.
Vacant Property: It is important to remember that there may be periods of time where you are not receiving rental income from the property. You will need to ensure that you can demonstrate sufficient savings and/or disposable income to weather such occurrences.
Fees: If you are using a letting agent, they will likely charge fees in order to manage your property. Your mortgage broker will also charge fees for services. These fees should be considered in your investment appraisal and/or business plan.
Stamp duty: When it comes to buying the property, there's potentially an additional 3% stamp duty to pay on buy to let properties. Use HMRC's Stamp Duty Calculator to work out your potential tax implications of the purchase.
Tax implications: New tax regulations are due to come into force in the very near future concerning investment properties. We recommend that you seek advice from specialist tax advisors prior to making any investments.
Maintenance: You will normally be required to maintain the property to an acceptable condition for which you will typically be liable for. Consider these potential costs in your budgeting and appraisal.
Regulation: There are governing regulations concerning health and safety that apply when letting property. Ensure these regulations, and any associated costs of compliance, are considered when investing in property.