Buy to Let Mortgage Scotland
Buy to Let Mortgage Scotland
;- Options outside of Mainland Scotland
- Portfolio mortgage options
- Up to 75% LTV
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Buy to Let Mortgage Scotland
Buy to Let Mortgage Scotland
';Up to 85% Loan to Value (LTV)
Scottish Isle mortgages
Mainland Scotland
First time landlords
Buy to let mortgages in Scotland have unique aspects due to different property laws and fewer available mortgage products compared to the rest of the UK. This makes specialist guidance essential for investors. Mortgage Lane, with its deep understanding of the Scottish market, offers the expertise needed to navigate these challenges and secure the best deals, even those not widely advertised.
Mortgage Lane’s comprehensive services extend across mainland Scotland and the Scottish Isles, ensuring that every investor finds the right mortgage option. Whether you’re looking to invest in a city centre apartment in Glasgow or a holiday rental in the Outer Hebrides, Mortgage Lane can assist with securing the right buy to let mortgage tailored to the unique conditions of the Scottish market.
Award winning buy to let brokers
Mortgage Lane stands out as an award-winning buy to let mortgage broker, renowned for its exceptional service and expertise in the property finance sector. Our commitment to excellence has been recognised across the industry, underscoring our position as a leader in securing competitive and tailored mortgage solutions for property investors.
Our director, Joseph, plays a pivotal role in maintaining this standard of excellence. He is a frequent presenter at finance masterclass events in Edinburgh and Glasgow, where he shares insights and real-world case studies that highlight what is truly possible in the property market with buy to let mortgages in Scotland. These events not only showcase the innovative strategies Mortgage Lane employs to secure funding but also educate and inspire investors about the potential for growth and profitability in their property ventures. With extensive experience presenting in Scotland and Newcastle at the border, partnering with specialist property education companies. These collaborations underscore our commitment to educating prospective and current investors on finance for property development and investment.
By attending these masterclasses, participants gain a deeper understanding of the diverse financing options available and how Mortgage Lane can tailor these strategies to meet individual investment needs. Whether you are new to property investment or looking to expand your portfolio, Mortgage Lane’s award-winning service and Joseph’s expert guidance ensure you have the best tools and knowledge at your disposal.
Buy to let mortgage Scotland property types
When exploring the Scottish buy to let market, investors encounter a broad range of property types. Each offers unique benefits and challenges, particularly underlined by the construction techniques employed. Mortgage Lane is adept at navigating these varied markets, ensuring that investors can find suitable mortgage solutions for any property type.
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Brick Construction: One of the most common and traditional construction types in Scotland, brick buildings are highly sought after due to their durability and aesthetic appeal. Often found in the form of Victorian and Georgian tenements in cities like Edinburgh and Glasgow, these properties are a staple in the buy to let market.
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Timber Frame: Increasingly popular due to their environmental sustainability and energy efficiency, timber-framed houses are common in both urban new builds and rural homes. Their quicker construction times and cost-effectiveness make them attractive to developers and investors alike.
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Steel Frame: Favoured in modern developments, steel-framed buildings provide strong, durable structures that allow for versatile design options, including open floor plans and large windows. These properties are particularly appealing in the commercial sector and modern residential high-rises.
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Precast Reinforced Concrete (PRC): While less common, PRC homes are part of Scotland’s housing heritage, primarily built during the post-war period. Despite challenges with mortgage-ability due to potential structural concerns, specialist advice from Mortgage Lane can guide investors through the process of acquiring and renovating these properties.
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Stone Construction: Reflective of Scotland’s rich architectural history, stone-built properties are prevalent, especially in rural and historical areas. These homes are prized for their character and solidity, often featuring in portfolios that focus on aesthetic and historical value.
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Granite Construction: Particularly notable in Aberdeen, known as the “Granite City,” granite buildings are a regional specialty. These properties are renowned for their longevity and striking appearance, though they can be costly to maintain.
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Cob Construction: Less common but noteworthy for their ecological footprint, cob houses are made from natural materials. While a niche market, these homes appeal to environmentally conscious investors and tenants.
Custom Solutions
At Mortgage Lane, we understand that every investor’s situation is unique, which is why we pride ourselves on crafting custom solutions that address specific needs. Collaborating with specialist lenders, we tailor our offerings to cater to diverse scenarios, including adverse credit histories, foreign nationals looking to invest in Scotland, and charitable organisations seeking property investments. Our bespoke approach ensures that each client receives a tailored strategy, enabling them to overcome typical financial hurdles and secure the best possible terms on their buy to let mortgage.
Not quite sure what you need?
If you aren’t sure what you need, request a call back from one of our expert mortgage advisors!
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Under 1 hour response time
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31 days average offer time
Overcoming Geographic Challenges
Geographic limitations can often hinder potential investments, as some lenders impose postcode restrictions that complicate securing mortgages in certain areas. At Mortgage Lane, we mitigate this challenge by leveraging our extensive network of lenders who do not enforce such geographical constraints. This capability allows us to facilitate buy to let mortgages across all regions of Scotland, including remote or less commonly serviced areas. Whether you’re interested in investing in the bustling streets of Edinburgh or a serene village in the Scottish Isles, Mortgage Lane ensures that your geographical investment ambitions are achievable.
Scottish HMO Valuations
In Scotland, a commercial valuation refers to a property appraisal method typically used for investment or business properties, such as office buildings, retail spaces, or Houses in Multiple Occupation (HMOs). This type of valuation differs significantly from a residential valuation, which generally assesses properties based on their market value as living spaces.
Key Aspects of Commercial Valuation in Scotland:
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Income Approach: The most common method used in commercial valuations is the income approach, which focuses on the potential income the property can generate. This involves estimating the annual rent that could be reasonably expected from the property and applying a capitalisation rate (cap rate) to this income. The cap rate reflects the investor’s required rate of return and is influenced by factors like market trends, property location, and the overall economic climate.
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Market Approach: This approach compares the subject property with similar properties that have recently been sold, especially those with similar use and income generation capabilities. Adjustments may be made based on differences in size, condition, location, and rental income, providing a comparative market value.
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Cost Approach: Less commonly used for income-generating properties but still relevant, the cost approach calculates the cost to replace the property minus any depreciation. This method can be particularly useful for newer properties or those with unique features that are not commonly found in the market.
Commercial valuations are particularly important for properties involved in business activities because they provide a more realistic view of the property’s financial potential, not just its value as a physical structure. For investors and lenders, these valuations offer a clear picture of the profitability and risk associated with the property, which is crucial for making informed financial decisions. In Scotland, understanding and effectively utilising commercial valuations can significantly impact the success of investment ventures, particularly in the buy to let market where rental income is a key factor.
HMO Commercial Valuation in Scotland
In Scotland, a commercial valuation refers to a property appraisal method typically used for investment or business properties, such as office buildings, retail spaces, or Houses in Multiple Occupation (HMOs). This type of valuation differs significantly from a residential valuation, which generally assesses properties based on their market value as living spaces.
Key Aspects of Commercial Valuation in Scotland:
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Income Approach: The most common method used in commercial valuations is the income approach, which focuses on the potential income the property can generate. This involves estimating the annual rent that could be reasonably expected from the property and applying a capitalisation rate (cap rate) to this income. The cap rate reflects the investor’s required rate of return and is influenced by factors like market trends, property location, and the overall economic climate.
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Market Approach: This approach compares the subject property with similar properties that have recently been sold, especially those with similar use and income generation capabilities. Adjustments may be made based on differences in size, condition, location, and rental income, providing a comparative market value.
-
Cost Approach: Less commonly used for income-generating properties but still relevant, the cost approach calculates the cost to replace the property minus any depreciation. This method can be particularly useful for newer properties or those with unique features that are not commonly found in the market.
Commercial valuations are particularly important for properties involved in business activities because they provide a more realistic view of the property’s financial potential, not just its value as a physical structure. For investors and lenders, these valuations offer a clear picture of the profitability and risk associated with the property, which is crucial for making informed financial decisions. In Scotland, understanding and effectively utilising commercial valuations can significantly impact the success of investment ventures, particularly in the buy to let market where rental income is a key factor.
HMO Mortgages for First-Time Landlords in Scotland
For first-time landlords eyeing Houses in Multiple Occupation (HMOs) with up to 6 units, Mortgage Lane offers a unique advantage in the Scottish buy to let market. Understanding the complexities and opportunities of HMO investments, we specialise in securing buy to let mortgages in Scotland that combine commercial valuations with residential buy to let interest rates, providing a financially advantageous setup for new investors.
Commercial Valuation with Residential Rates
We utilise commercial valuations for HMO properties, which are generally based on the potential rental income rather than just the market value. This method often results in a higher property valuation, enhancing borrowing capacity. Despite this advanced valuation method, our clients benefit from residential buy to let interest rates, which are typically lower than those applied to commercial loans. This combination means you can access a cheaper mortgage product while maximising your investment with a valuation that reflects the true income potential of your property. Interest rates for buy to let mortgages can vary, influenced by factors such as the borrower’s credit profile, the property’s location, and its income-generating potential. At Mortgage Lane, we work diligently with first-time landlords to secure the most competitive interest rates available for HMO properties, ensuring that your financial solution is both cost-effective and suited to your specific investment needs.
We assist with
- Buy to Let mortgage for HMO Scotland
- Holiday Let Mortgages Scotland
- Commercial mortgage Scotland
QUESTIONS ON BUY TO LET MORTGAGES SCOTLAND
Buy to let mortgage lenders will use the rental income of the security property, which is the property you are buying or remortgaging.
If you are buying in your own name, you may be stressed harsher than an applicant with a basic rate tax bracket. As an example a basic rate tax payer might be stressed at 125% and a higher rate tax payer at 145%. For a 5 year fixed, the lender may stress against the payrate of that product, such as 5.89% for example. In this case the calculation would go as follows for a basic rate tax payer, receiving rent of £600pcm from the property. 600 * 12 / 1.25 / 0.0589 = £97,792 (maximum loan)
It is interesting to know that Limited companies are stressed with a rental coverage of 125% mostly, unless it is a HMO. This means that if you are a higher rate tax payer, struggling with stress testing and achieving hoped loan sizes, you may be able to borrow more on a limited company mortgage.
Sometimes mortgage lenders, or valuers may not provider a mortgage or valuation where a property is within the close proximity of a commercial property that may reduce kerb appeal or “resaleability demand”.
An interest only mortgage is a mortgage, where you will only repay the interest on the principle amount borrowed. This can be useful for investors on buy to let mortgages, whereby they build this into their cashflow. However, for residential mortgages it requires more planning as “sale of security” isn’t so much of a widely accepted exit strategy for mortgages on primary residence.
Yes.
We work with many charities across the UK looking to raise mortgages for their cause. Some charities may purchase property to house vulnerable tenants they might be supporting, or a religious institution to buy property for their operations, as well as many other purposes.
A buy to let mortgage is used to purchase a property that you intend to rent out to a residential tenant on one tenancy agreement. Usually people take Interest only but capital repayment buy to let mortgages are also available.
Many Buy to Let mortgages operate on an interest-only basis. This implies that when the mortgage term concludes, the initial amount you borrowed remains unpaid. Therefore, a repayment strategy for this principal amount is essential. While you can always make extra payments alongside your interest during the loan’s tenure, it’s vital to have a game plan for settling the rest. Repaying the buy to let mortgage can be achieved through channels like drawing from other investments, utilizing savings, or opting to remortgage the property.
Yes, some lenders offer a 10% overpayment facility, per annum.
This means that if your principal loan was £125,000 then you could repay £12,500 per annum as an overpayment without incurring a penalty within your fixed term.
However, it is important to note that many lenders are stripping this from their product ranges, so it is always worth checking to avoid paying exit fees on amounts repaid.
Just like residential mortgages, there are also buy to let mortgage lenders that allow for applciants with adverse credit. So whether you have missed payments, CCJs, defaults or even an IVA, we can still source you with a suitable buy to let lender. If you have discharged from bankruptcy then your options will become better after 3 years and also subsequently 6 years.
Sometimes buy to let mortgage products allow for small HMOs, however, larger HMOs in the realms of 5 bedrooms plus may require a specific HMO product. Large HMOs again, 6 rooms and about that have been configured to be “fit for purpose” as a HMO, namely with En-suites etc, those assets usually seek a hybrid valuation to appreciate the investment bearing on the valuation, alternatively we can also seek commercial mortgage lending on the properties where necessary.
No.
Historically some lenders did have a minimum income for Buy to Let mortgages, however, a lot no do not. There are still a few that require a minimum income, but rest assured that if you are earning below £25,000 there are plenty of buy to let mortgage options out there for you.
We arrange cost-effective BTL mortgages for:
- Individuals
- Special Purchase Vehicles/Limited Companies
- Limited Liability Partnerships (LLP)
- Trading companies
- Charities
- On/Offshore Trusts
Yes.
It is important to let the mortgage broker know this information early on to avoid any declines, some lenders may reduce the loan to value after valuation if they were not aware of it; however, there are plenty of lenders that will lender up to 75% Loan to Value on a buy to let mortgage near a power station or powerlines.
Whilst some mortgage lenders do enforce a minimum income requirement (often £25,000), the majority of lenders do not have a minimum income requirement, as long as some level of an income can be evidenced.
A “day one mortgage” allows you to remortgage your property without the traditional waiting period. Historically, many buy-to-let lenders adhered to a “six month rule”, which posed challenges, particularly for investors employing the Buy, Refurb, and Refinance (BRR) strategy. If you’re an investor looking to capitalise on this approach, the good news is you no longer have to wait 6 months to remortgage the property based on its updated post-refurbishment valuation!4
If you’re thinking about putting buy to let properties into a trust to save on taxes, you’re not alone. This setup means the properties are in the trust’s name, not directly yours. Some mortgage lenders might not be comfortable with this, but many are.
The good news is, there is a lot of lenders that do, so whether your properties are owned in trust in British Virgin Islands (BVI) or outside of UK jurisdiction, we work with mortgage lenders that understand these structures.
People set up trusts for different reasons, like planning for the future, sorting out taxes, or giving to charity. When a trust needs a mortgage to buy a property or manage its existing loans, it’s the trust that handles the repayments and any related costs.
Buy to let mortgage lenders will usually want at least 20-25% of the property’s value because of the increased risks linked with these properties. In simple terms, they’re typically willing to lend you up to 75% of what the property is worth. We’re connected with other specialist lenders who might entertain a loan at an 80% Loan to Value ratio. However, such offers are generally earmarked for borrowers with a background in property rental. But lets not forget, whatever the maximum loan to value is, the property will need to “stress up” to be eligible for the loan size and therefore it will need to be affordable on its producing rental income.
Some investors may be making 15-25% returns on money they are investing into property, therefore having the option to defer capital payments can be advantageous to cash flow. If for example the interest rates are 7% and you choose to continue to borrow at that rate, you will need to make at least a 7% return, per annum to break even on your cost of borrowing. For investors able to make higher returns, there is a possibility of making profit whilst taking interest only buy to let mortgages.
Most buy to let mortgages are unregulated, which means it is not covered by the financial services compensation scheme. Therefore if you indent to live in your buy to let, you will need to change the product. This is the case for the vast majority of lenders, but there are some exceptions with lenders that offer “regulated buy to let mortgages”, these were designed for people renting to family members. Another exception to this rule is that some holiday let lenders may allow you to reside in your buy to let for 90 days of the year!
Most buy to let mortgages operate outside the umbrella of the financial services compensation scheme, meaning they’re unregulated. If you’re contemplating temporarily residing in your buy to let property, even temporarily, a shift in your mortgage product may be necessary. If your buy to let lender became aware of you residing in the property, they could ask you to remortgage immediately and or request the loan to be repaid in full.
Yes.
Some lenders who offer buy to let mortgages to first time buyers may limit the loan size to their maximum residential mortgage affordability. This will help the lender reduce any “back door buy to lets” this term is used by lenders for applicants looking to exploit the buy to let mortgage affordability rules to gain a higher loan size than they would otherwise be able to.
There is a way around being limited on loan size, you could buy on bridging first, refurb and refinance as a “property owner” rather than a first time buyer.
Yes. However, it is not advised, especially if you are buying in a traditional auction with just 28 days to complete. Traditional auctions are more generous on time, but if you are buying via the traditional auction route then it is unlikely you will get a mortgage offer and subsequently, legal searches of which some councils are taking over 6 weeks to return.
We assist our clients with buy to let mortgages all over Scotland, to include Mainland Scotland, The Isle of Sky, Bute, Lewis & Harris, Mainland Orkney, Mainland Shetland, Arran, Mull, Islay, Whalsay, Yell, South Ronaldsay, West Burra, Tiree, Unst and lets not forget Aberdeen.
We also assist clients with mortgages in Aberdeen, where house prices have seen some dramatic rises and falls, for that reason some lenders do not lend in this region however, at Mortgage Lane we are connected to lenders that do lend in Aberdeen.