Buy to Let Mortgage Advice
If you want to generate a side income that earns you some extra money to put away, then becoming a landlord is a great opportunity to consider. Becoming a landlord for a buy to let (BTL) property can only be advantageous; however, at the same time, it can be very complicated if you do not seek professional mortgage advice.
Buying a property can be draining as a lot of time and money is required to buy, maintain and rent out the property. This is where a mortgage advisor can get the ball rolling. At CareFiancials, we can provide our clients with fantastic mortgage deals and rates.
We provide access to the entire property market with contacts to some of the best lenders in town and a range of exclusive deals you won’t find anywhere else. For instance, let’s suppose you are looking to expand your property portfolio or you are looking to make your first-ever investment.
Depending on your goal, you may find the help of our expert BTL mortgage advisor beneficial. We always aim on providing professional and friendly mortgage advice that suits each client’s circumstances.
NOTE: We work, as introducer, with a number of reputed, well established mortgage brokers to offer mortgage services at the best possible rates who will assist you in finding the ideal home and securing the right mortgage by utilizing their in-depth expertise in estate agency mortgage services.
More About Buy to Let (BTL) Mortgages
Many mortgage options are available in the property market, and sometimes, it is tough to understand how well they work. We have briefly listed down some points to tell you more about buy to let mortgages to make your decision-making process more manageable.
Buy to Let (BTL) Mortgages
Buy-to-let (BTL) is a mortgage constructed to help you purchase properties intended to rent out to other people rather than live in. The borrowing amount for such a mortgage usually depends on the rental income that is expected to be obtained from tenants. However, in some circumstances, we may also consider other forms of income. Initially, you will need a more significant deposit for a BTL mortgage.
The BTL market has become increasingly complex over the past few years, with commonly changing regulations and new products entering the market.
At Care Financial Services , our experienced mortgage advisors ensure you access a wide range of lenders to choose from, along with excellent mortgage deals to suit your situation.
Why Should You Consider a BTL Mortgage?
Having a property that pays back can be great, but at the same time, it can be daunting. There are many reasons for why people may opt for a BTL property, some of them are listed below:
- A source of pension income after retirement
- A source of rental income from the property
- Future capital growth
- Inheritance for the kids’
Types of Landlords for a BTL Property
You may fall under three categories depending on your current circumstances and what you want to obtain. Depending on which category you fall in, the treatment for applying for a BTL mortgage may differ. This is why it is imperative to see a mortgage advisor so that they can help you make the process less demanding and straightforward. Below are the types categories of landlords:
Small Portfolio Landlords – Someone who owns four or fewer properties.
Portfolio Landlords –Someone who owns four or more rental properties.
Professional Landlords – Someone who owns ten or more properties and whose majority income is derived from the property market is known as a professional landlord
Eligibility Criteria for BTL Mortgages
You must be over 21 when applying for a BTL mortgage.If the applicant is considering making a joint application, they must be 18 years or above. Residential property is not required to buy a BTL property. You can apply for a BTL mortgage alone or with a group of 3 people, as long as the group members are not part of a company.
Income Status
At least one of the three applicants must have an annual income of up to £25,000 to borrow £1 million. If an applicant is applying alone, they must have at least a yearly income of £75,000 to borrow more than £1 million.
In a joint application where none of the members have an annual income of £75,000, you can borrow more than £1 million with a combined income of £100,000.
Credit Rating
Your credit score must have a good rating, as most lenders tend to base applications on past credit history, which can also affect the interest rate available to you.
Deposit Requirements
Initially, the deposit requirement for a BTL property varies between 25% to 40% of the purchasing cost, along with lenders issuing loans to up to 80% of the amount.
Mortgage Interest Rates for BTL Mortgages
The interest rate on BTL mortgages is based on many factors. Your mortgage advisor will look into these factors and will discuss these in detail when comparing different mortgage options.
Interest rate factors:
- Several properties you own and which category of landlord you fall into.
- Several BTL mortgages you already own.
- Types of loans you will receive in proportion to value.
- The status of your credit history/credit score.
- Whether or not you are a residential owner.
- Whether you want a repayment mortgage or an interest-only mortgage.
- Your monthly mortgage payment (budgeted)
The rental income and whether the mortgage product base should be a standard BTL calculation or pay-rate calculation – this is where your mortgage advisor can help as they will show you the best options and will use a mortgage calculator to allow you to have the best rate options that suit your situation the best, based on the rental income and BTL mortgage criteria.
- Is the property used by multiple occupancies or just a single dwelling?
- If you come under the portfolio landlord category, you may occupy properties under limited company structures, which will also affect the BTL mortgage rates available.
Currently, the greatest BTL mortgage rates are usually available for large deposit amounts, for instance, loan-to-value (LTV) below 65% or 35% deposits. The rates and fees between variable and fixed BTL mortgages up to 75% are more or less the same.
However, if you own an 80% loan-to-value (LTV) BTL mortgage, fees and rates may not have many comparisons, and discount variable rates will be lower than fixed-rate alternatives.
First-Time Landlords
If you are a first-time landlord, several factors must be considered before starting your mortgage journey.
You must keep in mind the questions below:
- What is your purpose for purchasing a BTL property?
- What is the BTL property market like in your chosen area?
- What effect will a drop in house prices have on you?
- Are you aware of stamp duty costs?
- Do you know what mortgage rate options are available?
- What rental income will you achieve?
- Do you want a repayment mortgage or interest-only?
- Do you have sufficient deposits to buy the property?
- How will you pay the monthly BTL mortgage instalments if the BTL property is not rented for some time
- Do you have a backup fund option?
As shown above, the process around BTL mortgages and making the right decisions can be very complex at times; that’s why you must have an experienced mortgage advisor who will help you understand every aspect of the process making it much easier and more efficient.
Stress-Free Advice
Our friendly & personable advisors offer you a free impartial mortgage advisory service from start to finish.
Market Flexibility
We ensure we'll find the best deal available for your circumstances regardless of which lender it comes from.
Choose your Mortgage
Our experienced financial advisors compare over numerous products to find the one best suited to your needs.
Quick and Simple
We can avoid many of the delays often encountered when searching for your own loans and get things processed quickly.
Why Choose Care Financials Services?
We provide you with experienced professionals who have a long history of helping clients with their BTL mortgages in the UK and will provide you with free mortgage advice that suits your circumstances the best. We ensure that we are fully equipped to support and guide our clients through their mortgage process, making it much smoother. The procedure of obtaining a BTL mortgage is never simple. We here at Care financials work towards providing you with the best deals and rates available to make the process more effective for you. We make sure that our expert advisors are up to date with the BTL lending criteria and legislation; this helps us give our customers accurate and appropriate mortgage advice that suits their current situation.
First Time Mortgage - Eligibility
Age
You should be at least 21 years or over.
Deposit
You need at least 25 to 40 % of the property value depending on the situation
Credit Score
You should have the bank specified credit score.
Frequently Ask Questions
If you have a question that deals with clients, customers or the public in general, there is bound to be a need for the FAQ page.
The amount an applicant can borrow is directly linked to the expected rental income. Lenders tend to stress the rental income being at least 25-30% more than the mortgage payments. The LTV (loan to value) determines how much can be borrowed, which is the percentage of the price of the property that your lender is willing to give you. The LTV can be up to 95% of the property value on a standard mortgage. However, BTL properties tend to have a lower LTV, which can be up to 75%. This further means that the applicant will need at least a 25% deposit, alongside funds that may be needed for other payments such as fees and money to get the property ready for the tenants.
The loan-to-value (LTV) ratio is a share of the property value that your lender is willing to give you. In other words, this is the amount you can borrow for your desired property. For example, if the value of a property is £300,000 and there is a £240,000 mortgage in the property value, this will mean that the LTV is 80%. While assessing the requirements for a loan, lenders consider LTV an essential factor. Most lenders have an 80% LTV available because they want to see buyers invest at least 20% of their savings into the mortgage. Of course, this is not possible for all buyers, especially first-time buyers who prefer to keep their personal investment limited. That is where 95% of mortgages come in handy. We want to make buying a property as simple as possible. The process may sound complex, but we take away all the stress and manage all the paperwork for you.
Here’s a brief and quick overview of the buying process and how we will help you with the following.
- work out to set your mortgage budget
- Help you in viewing properties
- make and secure an offer on your desired property
- can hire an experienced lawyer to deal with the legal side of the process
- finalise and submit your mortgage application to the lender you choose
Then,
- The lender will conduct a property inspection/survey to ensure that the mortgage you want is appropriate.
- Once satisfied with the value, they will formally offer you a mortgage.
- Your solicitor meets the legal process so you can exchange contracts and pay your deposit.
That’s it! It’s time to get the keys now that the house is yours.
Getting a mortgage is essential, but it doesn’t have to be complicated. We will be with you from the first point of contact up to the completion stage. Our main motto is to make the process as simple and stress-free as possible for our clients. Here’s a quick and brief overview of how the process will work and how we will help you:
- In a detailed meeting, your financial situation will be addressed to determine your borrowing power; this work will help you ensure you’re looking for properties in a suitable price range.
- We’ll review every piece of paperwork we’ll need to prepare to support your application.
- Once you’ve selected a property, we’ll find your ideal mortgage and take care of the application process for you. We’ll keep things as simple as possible.
- The lender will then conduct a survey to assess the property. The lender will discuss the report with their underwriter to determine whether you can afford the property. They might ask for a reference from your employer or accountant.
- Once the lender is satisfied with everything, they’ll make a formal mortgage offer. Then we’ll help you complete all the legal formalities and exchange contracts with the seller. You won’t have to worry about anything since we’ll be there to walk you through every piece of documentation.
Your application may be rejected for a number of reasons, some of which are listed below:
- Your income status does not meet the income required to purchase the property.
- You do not have a good credit history/credit score.
- The projected rental income is not sufficient enough – lenders tend to want to see a higher rental income than the monthly mortgage payments.
- You are not able to fulfil the deposit criteria for the property.
A mortgage advisor can act as an invaluable asset to the mortgage process. Even though it is not necessary to hire a mortgage broker for the process, their knowledge and advice can be of great use to the applicant. Mortgage advisors will be able to help you find better and exclusive deals and rates alongside helping you make your application much stronger.
Mortgage brokers can also help you find some of the best lenders in the county, according to your current situation. However, it is to be noted that such a service will come with a fee. Hence, you must be aware of the mortgage advisor’s role and importance before proceeding. Hiring a mortgage advisor could be the difference between you securing a mortgage deal- or not.
Disclaimer:
The content on this page is based on our understanding and knowledge at the time of publication. It may be subject to change and may not be applicable to your circumstances, so should not be relied upon. Please contact us if you require further information about the content included on this page.
Contact us
94 Street Lane, Roundhay, Leeds, LS8 2AL
0113 518 1624
lnfo@carefinancials.co.uk