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!

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.