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Trusted by landlords across the UK, we can help you live the best landlord life with our expert advice on buy-to-let mortgages, portfolio mortgages and refinancing. We can secure the financing deals that will take you to the next level, and avoid leaving money on the table.
So why miss out on a better deal, simply chat with one of our advisors and get straight to outstanding deals, including exclusive rates, not available on the high street.
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WHAT IS A BUY-TO-LET MORTGAGE?
A buy-to-let or buy to rent mortgage is a type of mortgage specifically for properties that are owned or purchased with the intention of renting them out.
They’re often set up on an interest-only basis, which means you only make monthly interest payments each month. The outstanding loan balance – i.e. the amount you borrow – doesn’t reduce and is paid back at the end of the mortgage term via a suitable repayment vehicle, usually the sale of the property.
If you rent out a property on which you only have a residential mortgage, you’ll be in breach of your mortgage agreement which could put your property at risk of repossession. To rent out your property without breaching your mortgage agreement you’d have to either obtain consent to let from your existing lender or switch to a buy-to-let product.
WHY IS FINDING THE RIGHT BUY-TO-LET DEAL ESSENTIAL?
Buy-to-let mortgages are designed for people who want to buy a property and rent it out rather than live in it themselves. It’s an investment. Therefore finding the right buy-to-let deal is critical if you want to make the most of your financial venture – otherwise, what’s the point?
As an independent mortgage broker, we’re perfectly placed to advise you and find a mortgage that matches your property needs. EH Capital has access to the whole market and we’re experienced in finding the most suitable mortgage product for less conventional situations.
Interest-Only Mortgage Calculator
Our interest-only calculator will help you work out how much your monthly interest payments could be on an interest-only mortgage. Simply enter the amount you want to borrow and the mortgage rate for the product you're considering.
BUY-TO-LET MORTGAGE CRITERIA AND CONSIDERATIONS
Your adviser will ask you for a rental income estimation when they first gather information about your circumstances and requirements. A rental income estimation is basically how much you think you’ll be able to charge in monthly rent on a property. You can ask estate agents for rental income estimates when you view properties. It’s also worth looking online at the rent for similar properties in the area you want to purchase. You need to provide your adviser with a rental income estimation as the lender will use your expected rental income to calculate what you can afford in monthly interest payments when they put together your DIP (Decision in Principle). They usually ask for rental income to be between 125% and 145% of the monthly interest payments and often conduct a “stress test” assuming an interest rate of around 5% to make sure you’ll be able to cover any fluctuations in interest rates or surprise expenses. Buy-to-let lenders will still look at your personal income to check you would be able to cover any periods when the property is vacant or any future repairs.
Rental property mortgages have higher interest rates and usually require bigger minimum deposits than residential mortgages – 20% compared to 5% or 10% – to compensate for the additional risk taken up by the lender.
Minimum and maximum ages for buy-to-let lenders vary but a few will accept applications from people as young as 18 years old and some will go as high as 85 years old. There are even a handful that don’t have a maximum age limit.
You can be a first-time buyer, first-time landlord, experienced landlord or professional landlord. Which lender you use depends on individual lenders’ preferences, but typically first-time buyers will find fewer lenders willing to lend on buy-to-let properties. Not all lenders accept large portfolios either.
Location of Borrower’s Residence
Buy-to-let lenders normally require that borrowers live in the UK. There are some lenders that accept expat applicants, but these underwriters may have slightly stricter overall criteria.
A poor credit history can make it difficult to obtain a mortgage, especially one at a particularly competitive rate. There are some lenders that are more flexible than others but these often require that you use a broker like John Charcol.
Landlords are taxed differently from private residential property owners. You’ll pay additional Stamp Duty when you buy your property and Income Tax on the rental income you receive from your tenants. It’s also worth nothing that you might have to pay Capital Gains Tax if you eventually sell the buy-to-let property.
WHY SHOULD YOU USE A BUY-TO-LET MORTGAGE BROKER?
Buy-to-let mortgages can be complicated and it’s the job of a mortgage broker like EH Capital to find you a suitable product.
But why is it so important to use a broker for a buy-to-let?
It’s not always easy to find the right information about the potential property types or the affordability criteria you need to meet online. We know the requirements for each lender and will look at your entire situation and future needs, so we can advise you accordingly
Some lenders require that you use a broker and won’t accept applications directly from applicants, which means we can give you access to more lenders and better rates
Buy-to-lets can be particularly complex, especially if you’re a new landlord. We make sure you understand how these mortgages work and exactly what you’re applying for
The adviser assigned to your case will do all the hard work for you, ensuring you get the best deal for your property