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Our helpful, friendly advice and service can advise you on Buy To Let mortgages and assist you in finding the right products for your goals and objectives in line with your current needs and circumstances.
We could also save you time and effort in the process.
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We will tailor and recommend a mortgage & protection solution designed specifically to your Buy To Let and portfolio needs as a Landlord.
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Buy To Let Mortgages
Buy To Let Mortgages are quite common in today's market, however they are not all regulated mortgage contracts.
If you are looking for a Buy To Let Mortgage in the course of running a business for awareness some Buy To Let Mortgages are not be regulated by the Financial Conduct Authority (FCA). That being said we are happy that we can still advise our clients and make recommendations for Buy To Let mortgages.
If your Buy To Let mortgage falls into an area where the advice given needs to be regulated, commonly known as Consumer Buy To Let, or sometimes Accidental Landlords, we are also very well positioned and authorised to advise on these mortgage contracts.
Below are some key points and tips to consider for Buy To Let mortgages.
Your property may be repossessed if you do not keep up repayments on your mortgage
Buy To Let Top Tips
If you are a Buy To Let (BTL) investor or have been following the news over the last 18 months or so, then you will be aware of some of the huge changes in the BTL sector.
There are many changes from all sides: legislative changes, tax changes, underwriting changes. Whilst it would be impossible to cover everything on here and how the changes might affect you, we will explain below some considerations for BTL investors and clients.
If you would like to consider a BTL mortgage, or would like to review your portfolio and financing needs and get some specific tailor made advice for you no matter what you are looking for then get in touch today for an Initial FEE FREE mortgage consultation to discuss your needs and requirements.
What Is Buy To Let?
Buy To Let is a means of using property as an investment. Instead of purchasing a property to live in, an individual, company or trust can buy property with the purpose of letting that property to tenants. The idea is that the tenants pay their rent and this rent covers the costs of mortgage payments, insurance and general operating costs of the property.
Different people get into BTL for different reasons. Most commonly the reasons may be to create an additional income stream from any profit left over from rents after deducting the expenses, or it may be for the long term capital growth potential which may be possible in the property sector. Historically house prices have risen over time, albeit with occasional high levels of volatility but the general long term trend has thus far been upwards. Others like to buy property as an additional pension provision or to provide a legacy to their children, family or estate.
The advice we provide does not cover the legalities or the tax implications relative to each set of circumstances, we suggest and recommend our clients seek expert professional advice in these areas if necessary and we can help to assist and introduce you to our partner firms if you would like.
The BTL advice we offer is to tailor specific bespoke mortgage and protection advice to each individual's needs and objectives. Whether you are looking at entering the marketplace for the first time, or whether you are a full time professional landlord with an extensive portfolio, we can advise and recommend solutions specifically to you for your situation.
With access to a wide range of lenders and relationships with other specialist firms, there is not a lot in the BTL sector that we cannot help you with.
Get in touch today to discuss how we can help you.
Your property may be repossessed if you do not keep up repayments on your mortgage
Buy To Let Basics
That being said one of the most fundamental principles in property investing is how to finance your property purchases. We can review your situation and what you are looking for and then compare that with a wide range of BTL lenders and their criteria. Our experience and expertise will help assist and advise you on your BTL mortgages and portfolio, we can work with you from the start of the application all the way through to completion.
With BTL mortgages there have been some significant changes over recent years including the increased need of a substantial deposit. The general industry consensus across many lenders is to have a minimum of 25% of the purchase price as a deposit. Other changes include availability of products, competition, limited company BTL mortgage, and more.
A 25% deposit is considered a starting point for many lenders as this ensures that they reduce their capital lending on a property and therefore have lower risk, it also ensure that the investor is committed and will not just walk away if things go wrong.
Landlords have legal duties and responsibilities for the properties and services they provide to tenants. They must ensure these properties are safe and legally compliant. They must also adhere to legislation when arranging tenancies, managing/ending tenancies, protecting tenant deposits and more.
There are many other factors to consider and take into account. One of these for example is the rent cover ratio which many lenders require as part of their underwriting and due dilligence process. For example, some lenders would require a minimum of 125% rental cover over the mortgage costs, i.e. if the mortgage repayment was £1,000 then the lender would require a minimum rental income on such a property to be £1,250 - which is 125% of the £1,000. Due to changing guidelines and direction from the regulator, most lenders have increased this rental cover calculation from 125% to 140% in many cases. This means the underwriting on a BTL mortgage with a monthly repayment of £1,000 would need a rental income now of £1,400 for the lender to consider lending on such a property. This requirement is to ensure that there is sufficient rental income to cover the costs of maintenance, insurance, voids and account for potential variations in interest payments.
The effect of this means that investors and landlords often need bigger deposits to keep their interest payments lower relative to the market rents and property values. It ensures that BTL investors are aware of their numbers and figures and fully understand their positions even before applying for a BTL mortgage.
We can assist you and advise on BTL mortgages for property professionals and investors with our wide range of experience in dealing with complex and difficult cases.
Your property may be repossessed if you do not keep up repayments on your mortgage
Buy To Let Changes
In addition to changes mentioned above there are many other things to consider:
HM Revenues & Customs practice and the Law relating to taxation are complex and subject to individual circumstances and changes which cannot be forseen.
Changes In Interest Rate Relief: For individuals that hold property in their own name, the amount of interest rate relief they can claim for the interest paid on their mortgage is being tapered away and will no longer be able to offset against their personal income tax liability. We recommend you speak to a specialist tax advisor that has experience in this area to assess your personal situation relative to this.
Stamp Duty Surcharge: Any property that is bought as a second home or BTL (all residential property excluding your main primary residence) is now subject to a 3% Stamp Duty Surcharge. Effectively this is an additional tax of 3% of the property purchase price above and beyond the normal stamp duty. That is you pay the normal stamp duty price plus an additional 3% of the property purchase price on top.
Stricter BTL Lending Practises: In addition to the increased rental cover requirement, any investor or landlord with 4 or more properties will face stricter stress testing right across their portfolio and will be required to submit a full account of the portfolio along with a business plan for further property purchases or refinancing
Wear & Tear Allowance: Historically landlords could claim 10% of their annual rent as a wear and tear allowance. As of 2016 this is no longer an available tax relief. Speak to your accountant about this as they will be able to advise you accordingly.
Right To Rent Checks: From February 2016 landlords have the legal obligation to check the legal status and eligibility of the individual/family moving into their property to ensure that they are legally allowed to live in the UK. A letting agent can take care of this for you if they are managing your property. However compliance is essential as failure to comply can lead to fines if you are found to have people living illegally in your property.
Selective Landlord Licensing: Some councils have introduced selective licensing for landlords where they must register with the local council which then requires landlords to meet certain minimum criteria and standards, with hefty fines for failure to do so. This is left for individual councils to adopt if they so wish, so check with your local council to see if this applies to your area.
Letting Fee Bans: The Government has outlined plans to ban all letting fees imposed on tenants before moving into a property. This includes costs for administration of tenancy contracts, credit and tenant reference checks etc. These fees are no longer to be borne by the tenants but passed on to the landlords. This is not yet in effect, but is anticipated that if it goes ahead it will be applicable sometime in 2018.
Energy Efficiency: From 1st April 2018 properties that are rented in the private rental sector must have a minimum energy efficient rating of E or above to be legally rented. Failure to comply can result in significant fines.
Speak with us today to get professional expert Buy To Let mortgage advice.
Some Buy To Let mortgages are not regulated by the Financial Conduct Authority.
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Your property may be repossessed if you do not keep up repayments on your mortgage
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Your property may be repossessed if you do not keep up repayments on your mortgage
*Commercial & some Buy To Let mortgages are not regulated by the Financial Conduct Authority.
^Syron Mainwaring Financial Ltd is a credit broker and not a lender
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