BUY TO LET MORTGAGES
BUY TO LET MORTGAGES
Looking to grow your property portfolio? No time is as good as the present, and no mortgage is too complex for us to negotiate.
Thanks to increasingly stringent affordability guidelines and regulations, buy to let mortgages have become more challenging to secure in recent years, despite the boom in the UK rental market. Not only are the best mortgage deals difficult to come by, but regulations are often subject to change.
Many lenders cap their lending at 75% loan to value (LTV), while some lenders will also need you to have a minimum annual employment income in addition to any anticipated rental income for non-portfolio landlords (who own fewer than four rental properties).
The upfront costs of a buy-to-let mortgage are frequently greater than those of a residential mortgage, and the rates also tend to be higher. Affordability is calculated using the actual or estimated rental income. This will depend on your personal tax position and property portfolio.
If you have previously lived in a property but would now like to let it out as a rental, you’ll need to remortgage to a buy-to-let mortgage. It’s important to understand that the buy-to-let market is always changing – and what was true when you applied for your current mortgage several years ago may no longer be the case. While this is especially true for high-value mortgages, our experience in this field enables us to find the right deal for you from our network of trusted lenders.
For those looking to borrow significant sums, you’ve probably already discovered how difficult it can be. If you require a large mortgage or million-pound mortgage, you may be unable to secure the interest rate, loan to value, or terms that work for you.
Thanks to our extensive network of private and specialist lenders, we can deliver a bespoke mortgage product for your needs, negotiating lending from one million to tens of millions.
There are three ways to purchase buy-to-let properties: in your personal name, under a limited company, or an SPV structure. This may depend on what your tax advisor recommends. Up until fairly recently, landlords purchased buy-to-let properties as a limited company.
A limited company is an entity, and legally separate from you as an individual. Your company is registered at Companies House, with you (and potentially others) owning shares.
Since a change in tax legislation, it is now more common to set up a special purpose vehicle (SPV). An SPV is a regular limited company used for a particular purpose – in this instance, to purchase a property for rental. Essentially, the property you buy is owned by the company, and you own that company. This is a preferable situation to many clients for potential tax benefits, but either way, we can connect you with tax advisors who can advise you on the best way to proceed.
A regulated buy-to-let mortgage is finance for a home to live in now used to live in before but have decided to rent it to other tenants or to family members. Most lenders have slightly different terms of what this means. For example, parents buying a house for their child to live in while at university, and the spare room being let out to a friend.
With an unreglated buy-to-let mortgage, the landlord has the intent of renting it out to private tenants and not family members. Unregulated buy-to-let mortgages aren’t designed for landlords looking to move into the property themselves, and so this term covers the majority of buy-to-let mortgages.
A portfolio mortgage is designed for buy-to-let landlords with multiple investment properties. It allows them to take out a single mortgage to cover all of their properties, rather than have multiple mortgages to service. However, if you’re applying for a buy to let mortgage with a partner, and you both own two mortgaged properties, this would also push you into this bracket.
These types of mortgages can throw up additional challenges: for example, some lenders will impose caps on the amount landlords can borrow across their entire portfolio. With the help of specialist advisors, you can ensure your portfolio continues to go from strength to strength.
A house in multiple occupation (HMO) is a property rented out by people who are not from the same household but share common spaces. For example, if you have a property with four students renting four separate bedrooms, you will need to obtain an HMO. You will often need a licence for this from your council.
There are advantages to renting out your home as an HMO. Your income can be higher when you rent out rooms individually, and for tenants, the price of a single room tends to be cheaper than the price of renting their own entire home.
HMO mortgages are also structured differently. HMO mortgage rates are higher than their standard buy-to-let counterparts and some lenders will only offer HMO mortgages to experienced landlords. No matter your situation or circumstances, we can advise you on the best solution for your needs.
Expatriates and foreign nationals can face multiple challenges when it comes to obtaining buy-to-let mortgages. Due to the complications involved, a majority of high street lenders are unable or reluctant to lend to non-UK residents or foreign nationals, leaving them in a difficult position. These complications include currency barriers, communication issues around time zones, and the fact that some lenders can put tighter restrictions in place.
In the past, we’ve helped clients from all over the world to expand their property portfolio within the UK.
Expats wanting a buy-to-let mortgage in the UK usually own their home before relocating and don’t want to sell off such a large asset. Unfortunately, buy-to-let lenders can be more restrictive when it comes to properties that have previously been owner-occupied – as these former occupiers are known as ‘accidental’ landlords. This means the mortgage then becomes regulated, which creates a lot more hoops to jump through.
Fortunately, we’ve dealt with this delicate situation plenty of times and are best placed to navigate the entire process.
Due to high demand in rental properties the UK is considered a stable place to invest in comparison to other countries. But foreign nationals may find that regulations are more stringent and tend to take longer than for buy-to-let landlords in the UK. On top of this, attempting to contact the bank when you are based in a different time zone can be almost impossible.
We can cover all UK-based correspondence in your absence, becoming your eyes and ears while you are abroad, and helping you to find the best solution possible for your needs.
As a result of recent regulatory changes affecting mortgage tax relief, it’s more crucial than ever to pick the correct mortgage for your buy-to-let portfolio.
We have close relationships with a wide range of buy-to-let mortgage providers. Not only are we able to advise you on the best mortgage deals, but our expertise on how to structure the debt on your portfolio can maximise your borrowing power. Plus, we keep an eye on the ever-changing market regulations, so you don’t have to.
Most of all, we take a proactive approach in maintaining and growing your property portfolio, getting satisfaction in seeing you succeed.
For more information on buy-to-let mortgages, check out our guide.