When working with an experienced mortgage broker, Buy to Let Mortgages have never been easier to obtain. Whether you are a 1st time landlord, a Private landlord, buying as a Ltd Company or a Portfolio landlord, adding to your portfolio of properties or sourcing an HMO (House of Multiple Occupation) using an experience mortgage broker will save you both time and money.
In this changing market you need to be aware of constant changes to legislation, tax rules and lender stipulations and this is where Aspire Financial Services can add real value to your buying experience.
Buy-to-Let Mortgages can be a complex area requiring specialist mortgage advice. Many of the UK’s lenders’ criteria varies greatly:
- Interest Coverage Stress Testing
- Maximum Age, Maximum LTV (Loan to Value)
- Maximum number of Properties that can be held in a portfolio
- Will they lend to a Ltd. Co? Many lenders will not
- And many other criteria specifics
These are just a few of the many factors that must be considered, and it is where a specialist mortgage broker helps and guides you through the maze.
Most lenders have a minimum deposit requirement of 25%, although some will allow just 20%. The higher deposit loans will normally come with more competitive mainstream rates, whereas you may be charged much less competitive rates with a 20% deposit.
For Buy to Let, mortgages are usually taken out on an interest only basis, however, repayment Buy to Let mortgages are also available. Note that it may be more difficult to meet the Interest Coverage as specified in the lender’s ICR (Interest Coverage Ratio) criteria if you opt for a repayment mortgage.
There are many new and ongoing changes in legislation and lender criteria that can affect your Buy to Let plans.
- Energy-Efficiency rating of the house
- Room sizes in HMO
- ‘Portfolio Landlord’ status
- Buying as an Individual or a Limited Company
Speaking to an experienced Buy-to-Let mortgage broker as part of your preparation before you plan which property to buy. We also work in partnership with a number of specialist property tax accountants that we can put you in touch with if you would like to understand the recent changes from HMRC and how these affect the return you can achieve.
Most Buy-to-Let lenders have a minimum income requirement of between £15,000 and £25,000, however there are some specialist lenders that have no minimum income requirement.
- Affordability is based on the monthly rental value of the property. It must cover the Interest payments by an agreed interest rate, allowing for tax deductions which is called the Interest Coverage Ratio (ICR)
- The ICR will vary from lender to lender
- The ICR is also affected by whether you are a normal or higher rate taxpayer, a limited company, or a portfolio landlord.
As you can see, although Buy to Let mortgages are more readily available, seeking the advice of an experienced mortgage broker to make sure you don’t waste your time and avoid the pitfalls that can await. Speak to us at Aspire Financial Services for specialist help and advice.
Book a free 30-minute introductory call.