Interested in a buy to let mortgage?
What is a buy to let mortgage?
A buy-to-let mortgage is a type of mortgage designed for individuals who want to purchase a property with the intention of renting it out to tenants. Unlike a residential mortgage, which is intended for personal use, a buy to let mortgage is specifically tailored to meet the needs of landlords and property investors.
When applying for a buy to let mortgage, lenders will typically assess the potential rental income of the property being purchased. This is because the rental income will be used to repay the mortgage, rather than the borrower’s personal income.
How it works
The process of obtaining a buy to let mortgage can be complex and time-consuming. As a mortgage broker, I understand the importance to guide you through each step of the process to ensure a smooth and successful application.
Preparation
The first step in obtaining a buy to let mortgage is research and preparation. This includes identifying the right property, researching potential lenders, and ensuring that you meet the eligibility criteria.
Mortgage Application
Once you’ve identified a suitable property and lender, the mortgage application process begins. This usually involves completing an application form and providing supporting documents, such as proof of income, bank statements, and details of existing debts.
Lender Assessment
After the application has been submitted, the lender will conduct an assessment of your financial situation and the property’s rental potential. This will include a valuation of the property and an assessment of your creditworthiness.
Mortgage Offer
If the lender is satisfied with the your application, they will issue a mortgage offer. This will include details of the loan amount, interest rate, and repayment terms. You should carefully review the offer and seek advice.
Completion
Once the mortgage offer has been accepted, the completion process can begin. This involves transferring the funds to the seller and registering the mortgage. You will also need to arrange insurance, pay any associated fees and taxes.
Payment
Finally, you will need to make regular payments on your buy to let mortgage.
Thinking of a becoming a landlord? Check out: https://www.gov.uk/browse/housing-local-services/landlords
What do you need?
To apply for a buy to let mortgage, there are a number of requirements that you will need to meet. These can vary depending on the lender, but generally include the following:
Proof of Identity
Proof of Income
Employment information
Bank statements
Property information
Tax returns
Landlord experience
Some financial products, such as certain buy-to-let mortgages, are unregulated and therefore do not benefit from Financial Ombudsman Service (FOS) and Financial Services Compensation Scheme (FSCS) cover. For example, the Financial Conduct Authority does not regulate some forms of buy-to-let mortgages.
Have a question or would like more information on buy to let mortgages?
First Time Buyers
Mortgages specifically designed for individuals who are purchasing their first home.
Residential
A residential mortgage is a type of loan used to purchase or refinance a residential property.
Buy To Let
Designed for individuals who want to purchase a property with the intention of renting it out to tenants.
Let To Buy
A mortgage that enables homeowners to rent out their existing property and purchase a new one to live in.
Remortgage
Remortgage is a process when a homeowner switches their existing mortgage to a new lender or product.
Protection
You’re in safe hands. I can support you in safeguarding your financial wellbeing and assets in case of unforeseen events.
Bridging Finance
A short-term loan used to quickly secure a property or access funds, typically until long-term financing is in place.
Buy to let – Frequently asked questions
Can I buy a buy to let property, as a first time buyer?
Most lenders require you to own your property. However, there are some lenders willing to lend if you are in rented accommodation or living with parents/partner, etc. So, yes, it is possible.
What is a minimum deposit for a buy to let purchase?
A minimum currently is 20%, however, most of the lenders won’t lend without 25% deposit. Standard is 25%
How much can I borrow?
Unlike residential mortgage, where the amount you can borrow is based on your income, a Buy to Let mortgage is assessed on an expected rental that the property is expected to generate.
What is house in multiple occupation (HMO)?
If you are planning on letting out your property to several tenants who aren’t members of the same family it may be a HMO. A property is classed as HMO if at least 3 tenants live in it, forming more than one household, and use shared facilities like the toilet, bathroom, kitchen etc. If you are thinking of doing so, HMO license might be required.
Can I buy a house and rent it to a family member?
No, if you are looking to get a buy-to-let investment mortgage on it. If you are looking to rent it out to your family member, you need a regulated buy-to-let mortgage.
Can’t find the answer you are looking for?