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Mortgage Finder ~ Buy To Let Mortgages

For a wholly dedicated and refreshingly professional approach to the BUY TO LET property lending market

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What is Buy to Let?

Previously, buying a property to produce an income was considered by lenders to be a commercial undertaking. Therefore mortgages, on property intended to be let, have in the past attracted higher interest rates than those available to owner-occupiers. Also, rental income was not usually allowed to be considered in the assessment of a borrowers ability to repay the mortgage.

However a great deal has changed in how these mortgages are structured and lenders are now more prepared to provide a much more flexible approach to lending criteria and interest rate charges.

Contact us today and see for yourself how you can achieve your objectives with our assistance providing a broad view of the Buy to Let mortgage market and unique mortgage products.

* Buy to Let Do's & Don'ts and * Lending Policy & Procedures

* Mortgages for Buy to Let

  • DO - Ask the advice on local rental market demands.
  • DO - Consider a buy to let property as a medium to long term investment.
  • DO - Furnish and decorate to a high standard. Good quality bathrooms and kitchens will attract the best tenants and help you to let quickly every time.
  • DO - Make sure your sums add up. Ensure that the rent will cover mortgage payments and other costs, even if you have periods without tenants?
  • DON'T - Buy anything with intensive maintenance problems. Large gardens add little to the rental value and will cost you a lot to maintain.
  • DON'T - Allow your own personal taste to influence your decisions. Ensure the property you choose matches the local market needs.
  • DON'T - Use off-the-shelf tenancy agreements from stationary shops. Ensure your paperwork suits your circumstances.
  • DON'T - Forget to issue the right documents or fail to have a condition report or proper inventory made before a tenant moves in.
  • DON'T - Leave the running of your property to friends or relatives when you are away. Tenants will need a proper management service.
  • DON'T - Use second hand furniture or old soft furnishings. You have to abide by the Furniture and Furnishing Regulations.


Mortgages for Buy to Let

There is not much difference between a Buy to Let mortgage and a standard mortgage for normal Homebuyers. Buy to Let mortgages are subject to the usual status checks. Generally Buy to Let mortgages are available for between 5 and 45 years and for up to 90% of the property value.

Through the Buy to Let scheme, the rental income you get for the property can be taken into account.

Generally, lenders will expect landlords to use a letting agent to manage the property and for the tenants contracts to be drawn up as Assured Shorthold Tenancies that are renewable every 6 months.

Insurance cover is also available to protect the rental in the event of a defaulting tenant, and for legal expenses as well as the usual building and contents insurance.

You should also consider the additional costs involved. Letting agent's commission, insurance premiums for building and contents cover as well as rental and legal expenses cover, the costs of keeping the property in a lettable condition, service charges and ground rents if the property is leasehold. The tenant is responsible for such items as utility bills, Council Tax and TV licence fee, etc.

You will be able to make taxable deductions against the rental income for the costs such as insurance, cleaning, gardening, agent's commission, loan interest and other reasonable expenses.

The cost of furniture, fittings and fixtures is not deductible, but subsequent replacement can be claimed or a wear and tear allowance of 10% of the rents received may be deductible.


Lending policy and procedures

Things have now changed and many lenders consider that the private rented sector should be encouraged. Lack of choice between renting and buying is generally considered to be bad for the economy and may even have contributed to the booms and busts in the housing market over previous years.

Now, changes in the lending criteria and lower interest rates are available, which can make Buy to Let an attractive opportunity for private investors.

Gross returns or the rent received before taking account of the costs incurred such as management fees, maintenance, service charges, ground rents and insurance, can vary between approximately 7% and 10%. Expensive properties may produce a lower return than cheaper ones.

The average rental return in the UK tends to remain at approx. 10% and capital appreciation is likely to be higher than inflation for the foreseeable future.

Generally, your gross rents should be between 125% and 150% of your monthly mortgage repayment and lenders will always have their different views on lending criteria therefore it is good to ask for advice on what is currently on offer as these aspects can often change regularly.

Buying a property to let is different from buying your own home. Simply ask us for advice and we will assist you in any way we can. Maybe two-bedroomed flats, or four bedroomed houses are more popular, or properties close to transport links or schools would be a better investment.

You should also consider the selection of tenants, will they pay their rent on time, leave the property at the end of the tenancy and leave it in a proper state? What about the day to day management of the tenancy?

Armed with suitable advice you may wish to appoint a letting agent if you do not care to manage the property yourself. Once a suitable property has been found, the letting agent may advise on whether or not it has letting potential, what rent may be achievable in the local market and whether re-decoration and new fixtures and fittings are needed to attract good tenants and to avoid the chance of long empty periods.

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Contact us either by phone on ~ 01244 950 314 (Local Rate), use the quick ~ CALL BACK form or use the brief ~ ENQUIRY FORM, and then simply allow us to assist you with further information without any obligation whatsoever.

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