Buy to Let in recent years has become an increasingly popular mortgage option for those wishing to invest in residential rental property.
However, some potential investors are put off entering the buy-to-let market due to the popular perception that buy to let mortgages are expensive.
Buy-To-Let - The Story Today
This popular misconception no longer holds true as lenders today are now offering increasingly competitive rates, which in many cases are generally not significantly higher than those on standard mortgages.
Landlords also have a choice between interest only and repayment mortgages. However, buy-to-let mortgages do differ in several important ways from standard mortgages.
A major difference is the criteria lenders apply when considering approving a loan. Buy-to-let mortgage lenders base their decisions generally on whether or not to approve a loan on the likely rental income from the property and may or may not take into account an applicant’s income.
In order to secure finance, rental income is typically needed to be 145% of the mortgage repayment, at a nominal 5.5% interest rate or the applicable rate whichever is higher.
What Can We Offer You
As we have access to hundreds of mortgages, the ability to negotiate exclusive deals with a huge range of lenders, we can offer a wide range of buy-to-let mortgages with some special features:
- From as little as 25% deposit required.
- A minimum personal income may be required.
- Limited company buy-to-lets.
- Buy-to-lets for large portfolios and professional landlord schemes.
Whatever your mortgage requirements, we’ll search the whole of the market to help source a suitable mortgage for you.
So, if you are planning to invest in buy-to-let, move your mortgage to, or remortgage an existing buy-to-let property, talk to us today.
Defining Consumer Buy-to-Let
The Mortgage Credit Directive Order 2015 defines a Consumer Buy to Let mortgage contract as a buy-to-let mortgage contract which is not entered into by the borrower wholly or predominantly for the purposes of a business carried on, or intended to be carried on, by the borrower.
Defining Buy to Let
The Mortgage Credit Directive legislation sets out a series of circumstances that would constitute a Buy-to-Let customer acting for the purposes of business, and therefore take them outside the scope of the legislation.
These include where a customer:
-uses the mortgage to purchase a property with the intention of renting it out,
-has previously purchased the property with the intention of letting it out and neither the customer nor a relative has inhabited it,
-already owns another property that has been let out on the basis of a rental agreement.
Stamp Duty from April 2016
From April 2016, anyone buying a second home or buy-to-let property – ie any property that won’t be your primary residence – will have to pay an extra 3% on each tier of stamp duty.
See the Stamp Duty Land Tax Calculator to work out how much Stamp Duty you’ll pay.
Geoff Baker Mortgage Adviser cannot be held responsible for the content of external websites.
The Financial Conduct Authority does not regulate certain aspects of buy-to-let mortgages.