The property market has had its ups and downs in recent years and the current financial landscape has led to more people choosing to rent as they cannot afford a mortgage, or the deposit needed to obtain one. This increased demand for rental property has seen a rise in the number of people purchasing property to let, not just from new landlords, but also from existing ones wanting to grow their property portfolio. Whether you’re completely new to buy to let or a seasoned property investor, you’ll know that finding the best mortgage deal can often be complicated and time consuming, but Expedite Finance has the knowledge and expertise to help you get the best deal possible.
There are a number of differences between a regular mortgage and a buy to let – which we will cover in more detail below – and if you are a first time landlord it pays to understand these details. Let’s have a closer look at buy to let mortgages, and at how Expedite Finance can help you.
Buy to Let – What you need to know
If you are buying a property specifically to let, you will usually not be granted a standard mortgage; there are many lenders who offer specialised buy to let mortgages, and our team have access to the many lenders who offer specific buy to let products. The following are just some of the main points to consider:
- You will usually need a greater deposit than with a standard mortgage; the usual requirement is between 25% and 40% of the value of the property
- The interest rate will generally be higher than that for a residential mortgage
- The mortgage agreed will usually be based upon rental income, rather than personal income; usually, the lender will demand that rental income is equal to or greater than 125% of the mortgage interest repayments. For example, if your mortgage interest repayments total £20,000 per annum, rental income must be £25,000 or greater.
The reasons for these requirements is that the lender needs to cover the risk involved; the mortgage market for both buy to let and residential has changed quite significantly throughout the years as a result of the optimistic lending prior to 2007.
In addition to the information above, there are often higher fees associated with buy to let and also capital gains tax issues to consider. Mortgage repayments must also be met each month, regardless of whether there are tenants in the property or not. With this in mind, it’s always best practice to ensure you have enough funds set aside to cope with any vacant periods.
There may be a number of details that the lenders insist upon. For instance, you will usually need to be 25 years of age or more and you will be required to match a minimum income per year, probably of around £25,000; also, some lenders may have limits on the number of buy to let mortgages they will allow you to take and set an upper limit on the total amount loaned to you. These are all scenarios where Expedite Finance can help with finding suitable lenders and mortgage products.
Bear in mind also that, in most cases, buy to let mortgages are interest only; in other words, you pay only the interest on the loan each month, and then the capital investment is repaid upon the sale of the property or at the end of the agreed term. As with all mortgages, there are risks involved, but if you consider your options carefully and take expert advice, property can be a sound and profitable investment.
How Expedite Finance can help
With a wealth of experience in the buy to let mortgage market, Expedite Finance is perfectly placed to help you find the best mortgage available. We understand that getting a mortgage can appear to be a complex process, especially if you already have a portfolio of properties, but we have the expertise to guide you through these complexities so you can sit back and relax whilst we work on your behalf to find you the best deal possible.
Our team may have access to products and rates that aren’t available through the high street or directly to you. We ensure that we look at every possible option in relation to your personal circumstances, in order to make sure you’re getting the most suitable product and rates available. Whether you are a first time landlord or an existing one with a small or large property portfolio, Expedite Finance is here to provide you with a friendly and efficient service for all your mortgage needs.
For mortgages, we can be paid by commission from the lender and a client fee of £395 paid on completion of the mortgage.
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE