Are you thinking of buying your first Buy To Let property or adding to your current portfolio? Do you already have a buy to let mortgage and are looking to switch to a better mortgage deal or are you looking to let out your current home?
Where Do I start?
Begin by speaking with us today. We’re experienced mortgage brokers and offer Free Initial Advice with no obligation. We have access to whole of the market and will search 1000’s of mortgages to find you the best possible Buy To Let mortgage for your situation.
What is a Buy To Let mortgage?
Buy to Let mortgage is designed for borrowers whose intention is to let the property out to a tenant. Whether you are investing in buy to let properties for the potential income or for the potential capital growth, choosing the right mortgage is essential. More and more people are investing in property as a long-term opportunity to make profitable returns, and as a way of securing finance for their retirement.
What will the mortgage lender require?
When buying your investment property your Buy to Let mortgage lender will want to establish whether the property you are buying is a good long-term investment. Besides your personal situation you will also be expected to meet certain criteria:
You will be required to put down a deposit for buy to let mortgages and this will be typically larger than for a standard residential mortgage – it will likely be 15-25% of the property’s value.
2. Rental Income
The expected rental income must exceed your buy to let mortgage repayments by a certain percentage – for example, mortgage lender may require a rental income between 125% to 145% of the monthly mortgage payments using their own rental stress testing. This will vary from lender to lender as different calculations are used across the market or if you fall into one of the following categories: Standard Buy To Let, Portfolio Buy To Let or a Limited Company Buy To Let.
When searching for an investment properties it is important to check number of things i.e. if the property is of a non-standard construction, studio flats, above commercial premises, newly converted. The property will need to be in a lettable condition, restrictions on the number of bedrooms, number of floors or number of units in a block. HMO’s (Houses in Multiple Occupation) also have different rules and have separate criteria to standard residential buy to lets, and may or may not be subject to licensing by the local authority.
Do I qualify for a Buy To Let Mortgage?
We have experience and great knowledge in the Buy to Let sector and can help all clients whether they are First time Landlords, First time Buyers, an Experienced Landlord looking to expand their buy to let portfolio, Landlords looking to purchase a property as HMO ( House of multiple occupation ), Limited Company Buy to Let, or Remortgaging and releasing capital for further Buy to let expansion.
What type of ownership can I have?
You can own a Buy to let property in private name(s) or a Limited Company Buy to Let which has seen an increased popularity in recent months. This can often be a more tax efficient way of owning Buy to Let properties but to check this you must speak to your accountant or a tax adviser who will be able to advise you on what the best way is for you to own a Buy to Let Property.
Can I let out my current home?
If you’re moving home, you may wish to keep your current home and transform it to a property to let, this is also known as “Let To Buy”
If you decide to do this, you will need a buy to let mortgage. One other options is to ask your current lender for their consent to let the property out. This may involve switching your mortgage to a buy to let rate if lender allows this or they will grant you a consent for an additional fee. Alternatively, you can remortgage to a new lender on a buy to let deal. If you plan to stay with your current lender, you must inform them that you intend to let your home as failure to do so could mean a serious breach of contract.
If you need to release some equity from your current home to fund your new purchase, you can do this at the same time when remortgaging to a buy to let. For this you will need to satisfy lender’s criteria.
From 6 April 2016, higher rates of Stamp Duty Land Tax (SDLT) have been applied to the purchase of additional residential and non-residential properties which attract an additional 3% stamp duty surcharge. Anyone buying a second property that isn’t their main residence will be charged the extra 3% on top fof the normal SDLT. This will include holiday lets or buying a property for children if the parents leave their name on the title deeds.
On 8th July Rishi Sunak announced in the Chancellor’s mini budget a temporary holiday on stamp duty in England and Northern Ireland to try and boost the property market.
Landlords and second home buyers are also eligible for the tax cut but will still have to pay the extra 3% of stamp duty they were charged under the previous rules, but this will be on the whole purchase price.
Click HERE for more details about the Temporary Changes to Stamp Duty cut and how to calculate your stamp duty liability.
From 6th April 2017, you will no longer be able to deduct your interest only mortgage payments from your rental income fully. The new rules will be phased in gradually from 2017 through to 2020.
Landlords will be able to obtain relief as follows:
We therefore advise all Buy to Let clients and anyone looking to purchase a Buy to Let property to get a specialist tax advice.
We’re mortgage specialists and pride ourselves on our expert knowledge and great customer service. We help clients in Byfleet, Woking, Guildford, across the Surrey & Nationwide with their buy to let mortgage requirements.
If you’d like to speak to a highly-skilled mortgage agent about getting the best mortgage for your buy to let property, contact us today.
Not all Buy to Let mortgages are regulated by The Financial Conduct Authority.
Get in Touch, and let us start your search. Today.