Buy to Let Mortgages

If you are looking for a buy to let mortgage, our team of award winning brokers would be pleased to assist. At Mortgage Lane, many of our advisors are buy to let investors themselves, so we really understand the value in the products we recommend. Whether you are first time buyer with a low credit score or an experienced portfolio landlord we are well versed with your situation.

Buy to Let Mortgages

If you are looking for a buy to let mortgage, our team of award winning brokers would be pleased to assist. At Mortgage Lane, many of our advisors are buy to let investors themselves, so we really understand the value in the products we recommend. Whether you are first time buyer with a low credit score or an experienced portfolio landlord we are well versed with your situation.

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PROCESS BREAKDOWN

1

Information gathering and advice

The first process in your mortgage application will be gathering or updating information in relation to the property, tenants, or yourself. Once this has been established your expert buy to let mortgage broker will make a product recommendation.

2

Credit approval

Once you are satisfied with the product recommended and have confirmed to proceed, this will usually be submitted the same day to give you a decision, until this point there is still nothing to pay! As long as the Agreement in Principle (AIP) was approved, we can move to application stage where fees become payable.

3

Application, valuation & underwrite

Once the application is submitted, your valuation will be booked in  and most of the time (depending on the lender). This will usually completed once your initial underwriting has been completed. Once the valuation is returned, if acceptable, the lender would then look to make a formal offer. You can then move to legal stage.

4

Offer and completion

Once you have had your buy to let mortgage offer, you will require adequate legal advice and then once you’re happy, your solicitor can draw this down once the legal requirements are satisfied. Your broker at Mortgage Lane will always be checking in on the application post offer, so we are chasing for you too!

Buy to Let affordability and beyond

Unlike residential properties, Buy to Let mortgage affordability is calculated via the received rental income (for re-finances) or projected rental income (for purchases).

Sometimes mortgage lenders, or valuers may not provide a mortgage or valuation where a property is within the close proximity of a commercial property that may reduce kerb appeal or “resale ability demand”.

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.

Types of Residential Buy to Let mortgages

We assist both business owners and investors with Commercial Mortgage advice. Below we explain all the types of variations you might come across as well as information on different ownership types and how this can impact your mortgage options.

Single let mortgages

A single let is a property rented to one household. Mortgage lenders do not usually require any experience for this letting type, so it can be suitable for first time investors or landlords looking to expand their portfolio.

Lenders will access these properties against the valuers estimation of what the Assured Shorthold Tenancy (AST) will produce in rental income and not what you’re achieving. Please see more information on stress testing in our FAQ

Small HMO mortgages

Not all Houses in Multiple Occupation (HMOs) necessitate planning permission or licensing, and for such properties, there are a select few lenders who might consider them under their standard residential buy to let mortgage products. When it comes to limited company lending, the options are relatively fewer.

Alternatively, we are able to achieve a HMO mortgage on a small HMO, where the lender understand the lack of requirements for licencing and planning, whilst this isn’t wide spread, Mortgage Lane have been successful in working with lenders that have completed on multiple small HMOs that have not required these items. Please also refer to our HMO page.

Learn more about HMO Mortgages >

 

Heritage properties

Grade 1 and Grade 2 listed buildings are not always approved by residential mortgage lenders, however the advisors at Mortgage Lane are connected with lenders that have products designed to lend against these asset types. These properties tend to be large in value and size, therefore we often see them designed as flats or Multi Unit Freehold Blocks (MUFB). Being large in value this can make achieving higher loan to values harder, yet even if that is the case we may also apply “top slicing” which adds in personal income to make up for shortfalls calculated when stress testing.

Applicants based overseas

At Mortgage Lane we have a well connected global reach of customers who we regularly assist with Mortgage Advice against residential UK property, for buy to let.

For Expatriates otherwise known as Expats these are applicants where individuals are from the UK but now living abroad. Often we deal with expats in Dubai, America, Australia, New Zealand, China, Hong Kong, Singapore and many more locations.

Where every you are, we have lenders that are able to lend to expats in the following circumstances:

  • No minimum income
  • No experience

For Foreign nationals that are not UK domicile (tax status) are able to get a UK residential buy to let mortgage, many of our investors reside in the above location and lenders typically base their lending around experience, credit foot print in the UK and sometimes a minimum income requirement. We do have lenders that will lend to a foreign national where the applicants have low income or no experience.

At Mortgage Lane we also assist overseas nationals get UK property mortgages where the country them are residing and where deposit funds derive, may be high risk on the Basel Index which is an annual ranking used by lenders to grade the countries Anti Money Laundering (AML) procedures.

If you also require a processing agent to make yourself eligible for UK mortgages, then we can also recommend a suitable company to assist you.

Learn more about mortgage for foreign nationals with Mortgage Lane >

 

Social housing mortgages

At Mortgage Lane, we specialise in offering tailored mortgage solutions for Social Housing Residential Buy to Let properties. Our expertise encompasses properties leased to a broad spectrum of social housing providers, many of whom handle complex care arrangements. We are adept at assisting clients in obtaining mortgages for properties that serve a vital role in both short-term and long-term social housing.

The varied landscape of social housing requires detailed knowledge of each property’s lease agreement. It is essential for clients to provide Mortgage Lane with comprehensive lease details for the property they are looking to purchase or remortgage. This enables us to accurately match you with a lender that is open to the lease’s specific conditions, including the social housing provider, lease duration, and tenant demographics.

In the realm of Social Housing Residential Buy to Let, we often encounter tenant types such as:

  • Care leavers
  • Individuals in need of assisted care
  • Ex-offenders

By understanding the diverse needs of these tenant groups, we can ensure the mortgage products we recommend are perfectly suited to the unique challenges and requirements of your Social Housing Residential Buy to Let property, guaranteeing a customised and efficient mortgage solution.

Learn more about our social housing financing options >

 

 

Specialist build types

At Mortgage Lane we are used to complex cases where the property might be non standard construction. We have successfully obtained mortgages on the following residential buy to let property types:

  • Cornish construction
  • BISF Steel construction
  • Precast reinforced concrete (PRC) construction
  • Timber builds
  • Timber frame
  • Flat roof
  • Deck access
  • Single skin build
  • Woolaway bungalows
  • Colt bungalows

Top Slicing

Top slicing on a residential buy to let mortgage is used where the rental income isn’t enough to achieve the desired loan size when stress testing. This gives eligible borrowers the ability to subsidise their buy to let affordability with their own personal income. This can reduce the impact of the increase in interest rates and may be useful to mortgage prisoners affected by this.

Top slicing is only offered by a handful of lenders, so please check in with an advisor at Mortgage Lane to enquire about these options.

Specialist buy to let mortgage options

We work with specialist lenders that allow for complex criteria points, which proves helpful to applicants looking to mortgage against properties with the intension to run as HMO, serviced accommodation, social housing and multi unit freehold blocks. Usually tier 1 or high street lenders either don’t allow for these strategies or will require experience.

Specialist scenarios we assist with:

  • No experience
  • Not a homeowner
  • No income
  • Adverse credit
  • Expats
  • Foreign nationals
  • Sharia Compliant
  • No six month rule
This thread is not legal or tax advice, if anyone is looking to do anything noted in the contents, we recommend you speak with a qualified individual.

TRY OUR BUY TO LET MORTGAGE CALCULATOR

ANSWERS TO COMMON QUESTIONS AND QUERIES ABOUT BUY TO LET MORTGAGES

How is affordability calculated on Buy to Let mortgages?

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 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.

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Can I get a buy to let mortgage near a commercial property?

Sometimes mortgage lenders, or valuers may not provide a mortgage or valuation where a property is within the close proximity of a commercial property that may reduce kerb appeal or “resale ability demand”

SPEAK TO ONE OF OUR EXPERT BUY TO LET MORTGAGE BROKERS TODAY

 

What is an interest only buy to let mortgage?

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.

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What is a buy to let mortgage?

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

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Do I need to repay an interest only mortgage at the end of the term?

Many Buy to Let mortgages operate on an interest-only basis. This means 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, utilising savings, or opting to remortgage the property.

 

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What are the advantages of using interest only mortgages with Buy to Let

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.

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Can I overpay on my interest only buy to let mortgage?

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.

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How do I get a buy to let mortgage with bad credit?

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.

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Can I get a buy to let mortgage on a HMO?

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.

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Do I need a minimum income for a buy to let mortgage

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.

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What entities can take a buy to let mortgage?

We arrange cost-effective BTL mortgages for:

  • Individuals
  • Special Purchase Vehicles/Limited Companies
  • Limited Liability Partnerships (LLP)
  • Trading companies
  • Charities
  • On/Offshore Trusts

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Where do you broker Buy to Let mortgages in the UK?

We assist our clients with buy to let mortgages in England, Wales, Scotland, and Northern Ireland.

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Can I get a buy to let mortgage near a power station or powerlines?

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.

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What income do I need to get a buy to let mortgage?

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.

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What is a day one buy to let mortgage?

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 need to wait 6 months to remortgage the property based on its updated post-refurbishment valuation!

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How much deposit will I need for a buy to let mortgage?

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 let’s 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.

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Residential buy to let mortgages without new build warranty?

Mortgage Lane is dedicated to assisting clients with residential buy-to-let mortgages, particularly those that have issues with new build warranties. Our specialised knowledge is instrumental in navigating the unique complexities associated with warranty requirements in the buy-to-let market.

Overcoming Warranty-Related Declines in Residential Buy-to-Let Mortgages

Navigating New Build Warranty Absence: The challenge of obtaining residential buy-to-let mortgages for new builds or conversions without a new build warranty can be significant. We collaborate with lenders who are receptive to alternative forms of assurance, like the Professional Consultant’s Certificate (PCC), providing a viable path to overcome these mortgage declines.

Tailoring Solutions to Meet Lender Criteria

Adapting to Lender Variabilities: We understand that lenders have varying definitions and requirements concerning new build warranties for residential buy-to-let properties. Mortgage Lane guides landlords through these criteria, enhancing the prospects of mortgage approval despite previous setbacks.

Customised Mortgage Options for Buy-to-Let Properties: Recognising the distinct challenges faced by buy-to-let investors, we focus on sourcing mortgage solutions that cater specifically to their needs. This includes addressing warranty issues for both newly built and converted properties in the residential buy-to-let sector.

Mortgage Lane’s Commitment to Buy-to-Let Investors

Our goal at Mortgage Lane is to support buy-to-let investors who have faced difficulties with mortgage approvals due to warranty issues. We are committed to finding the right residential buy-to-let mortgage options, turning potential declines into successful investment opportunities. By offering expert guidance on alternative solutions to traditional new build warranties, we ensure that our clients are well-equipped to make informed decisions for their property investments.

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Low lease Residential buy to let mortgages?

Specialising in Residential Buy-to-Let Mortgages for Short Leasehold Flats at Mortgage Lane

Mortgage Lane is skilled in meeting the distinctive requirements of residential buy-to-let mortgages for flats with limited leasehold years remaining. For landlords and investors, comprehending the leasehold tenure’s impact on mortgage approvals is vital.

Leasehold Tenure’s Impact on Buy-to-Let Mortgage Approvals

Significance of Lease Duration: In the realm of residential buy-to-let mortgages, the length of the leasehold – the remaining duration of the lease – is a key consideration. Properties with shorter leases can present financing challenges, affecting their value and desirability as security for loans.

Mortgage Lane’s Solutions for Short Leasehold Buy-to-Let Properties

Collaboration with Flexible Lenders: Our network includes lenders adept at handling buy-to-let mortgages for properties with shorter leases. We can arrange financing for flats with lease terms potentially as low as 25 years remaining at the end of the mortgage term, often linked with a lease extension plan.

The Role and Advantages of Lease Extensions

Understanding Lease Extensions: Extending the lease of a property legally prolongs its duration, thus enhancing its appeal to lenders and increasing its market value, a crucial factor for buy-to-let investments.

Initiating Lease Extensions with Section 42 Notice: The process typically begins with a solicitor issuing a Section 42 Notice to the freeholder on behalf of the leaseholder. This notice is crucial for starting the lease extension negotiations, essential for securing longer lease terms for buy-to-let properties.

Benefits of Lease Extensions in Buy-to-Let Mortgages

Enhancing Mortgage Approval Prospects: For buy-to-let properties with shorter leaseholds, pursuing a lease extension can significantly improve the chances of mortgage approval, making it a strategic move for investors.

Adding Value to Investment Properties: Apart from aiding in mortgage approval, lease extensions can also elevate the property’s resale value, enhancing the overall investment.

Expert Guidance from Mortgage Lane: While we provide extensive assistance in securing buy-to-let mortgages for short leasehold properties, it’s important to note that Mortgage Lane does not offer legal, tax, or valuation advice. For such matters, especially concerning lease extensions, we advise consulting with legal experts.

Our goal at Mortgage Lane is to help clients navigate the complexities of obtaining buy-to-let mortgages for properties with short leaseholds, ensuring they are equipped to make informed decisions about their property investments.

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Can I reside in my buy to let property

Most buy to let mortgages are unregulated, which means it is not covered by the financial services compensation scheme. Therefore, if you intend 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 some holiday let lenders may allow you to reside in your buy to let for 90 days of the year!

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Can I live in my buy to let property temporarily?

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.

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Can First time buyers get a buy to let mortgage?

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.

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Can I use a buy to let mortgage if I am buying at auction?

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.

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Are buy to let mortgages regulated?

It is important to note that Buy to let mortgages are not covered by the Financial Services Compensation Scheme, so borrowers should ensure they are dealing with a reputable lender.

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Learn more about mortgages with Mortgage Lane

At Mortgage Lane, we see the most complex of Buy to Let mortgage applications, some of which make a good read for investors looking to learn from other applicants challenges, or for those effected by the topics! See more buy to let mortgage topics covered in our blog here.

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BEGIN YOUR BUY TO LET MORTGAGE JOURNEY WITH US TODAY

Let us know about your enquiry and one of the team at Mortgage Lane will be in contact to assist!

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By submitting your details in this form, you agree to our privacy policy and occasional marketing information via email around relevant products and services. You can opt out at any time

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