SMART
Buy-to-Let Mortgage
Whether you are thinking about purchasing your first Buy to Let Property or are adding to your portfolio your mortgage repayment will be the biggest out going cost, securing the right Buy to Let Mortgage is essential to maximise on your profit. The whole process can seem quite bewildering and the mortgage market can be somewhat challenging to navigate.
Mortgage Advice Bureau have an extensive list of exclusive mortgages that can only be obtained by going through a specialist adviser rather than online or through a high street bank.
Your Mortgage Advice Bureau Adviser will guide you through the mortgage deals available and recommend a mortgage to suit your individual needs, budget and circumstances. They will clearly explain the “jargon” there is no question that hasn’t been asked before or needed to be explained more than once. The help and advice does not stop at the mortgage. Your adviser is here to recommend the most efficient solicitors and most importantly, protect your new home and yourselves with home and life insurances.
The team are here for you through the whole journey. Keeping you updated at all times and making you aware of every milestone crossed along the way.
Things to consider about Buy to Let
How much deposit do I need for a BTL mortgage? Most lenders will need a minimum 25% of the purchase price to be put down as a deposit from usually some form of cash savings or gift or inheritance. However, there are some products available with 20% deposit but these rates will usually be higher as are seen as higher risk by the lender.
Speaking to an adviser is essential as the deposit amount required is also dependent on the rental income of the property, the lenders stress rate and the loan amount available.
What is a stress rate? Lenders will use a stress rate (which can vary dependant on if you are buying personally or as a company and what your personal income tax band is, as well as if you are looking at a 2 or 5 year fixed rate) to “stress” the loan amount at a higher rate than the product being offered to calculate whether they consider the loan is affordable long term in case of future rate rises.
For example a lender may need the monthly rental income to cover the mortgage amount at 140% based on 5.5%. To support a mortgage of £150,000 @ 5.5% @ 140% / 12 months = £962.50 monthly rental income is required.
Your adviser will be able to let you know the stress rates from each lender and calculate the maximum loan based on the property if you can provide the anticipated rental income.
How much income do I need? There are lenders available who have no minimum income and a few who are happy with no income at all basing the loan amount solely on the property’s rental income. However, the standard high street lenders do tend to have a minimum income requirement which is around £20,000 – £30,000, varying between lenders.
Mortgage Advice Bureau’s advisers offer a free no obligation consultation when you contact them. Their advisers are experts in their field and have access to 90 lenders or more, therefore we will find you the right mortgage suited to your circumstances.
Please Note: There is no guarantee that it will be possible to arrange continuous letting of the property, nor that rental income will be sufficient to meet the cost of the mortgage.’
