Whether it is your first buy-to-let, the next addition to your portfolio or a remortgage, we will help you find the right mortgage and make sure the numbers stack up.
Your property may be repossessed if you do not keep up repayments on your mortgage.
Not all Buy to Let Mortgages are regulated by The Financial Conduct Authority.
Buy-to-let mortgages are assessed differently from residential mortgages, which is where some landlords get caught out.
The starting point is usually the property’s expected rent. Lenders usually use a rental coverage calculation to check whether the rent will cover the mortgage interest by a required margin. They normally test this using a higher interest rate than the one you will initially pay.
Your personal income can still matter. Some lenders require a minimum earned income, while others may use it to support an application if the rent falls slightly short, known as top slicing. Your credit history, landlord experience, existing portfolio and the type of property will also influence the decision.
Buy-to-let mortgages usually require a larger deposit than residential mortgages. Some lenders accept a 20% deposit, but putting down 25% or more will normally give you a wider choice of products. Rates and arrangement fees can also be higher, so we compare the overall cost rather than focusing on the headline rate alone.
More landlords now consider buying property through a limited company, partly because of the different tax treatment. However, it is not automatically the right choice for everyone.
Always speak to a qualified tax adviser before choosing this route. We can advise on the mortgage, but whether a company structure is suitable will depend on your income, future plans and existing property portfolio.
People may consider a limited company because:
A word of caution: Limited-company mortgages can carry higher rates and fees, and directors will normally be asked to provide personal guarantees. There are also company administration costs and potential personal tax to consider when taking money out.
Transferring a property you already own into a company is normally treated as a sale. This could result in Stamp Duty Land Tax, Capital Gains Tax, legal fees and refinancing costs. Any potential tax benefit must be considered alongside all of these costs, both now and in the future.
Let-to-buy allows you to keep your current home and rent it out while purchasing somewhere new to live. Depending on your lender and circumstances, you may need consent to let or a full buy-to-let remortgage.
You will then arrange a separate residential mortgage for your new home, potentially using equity released from the original property towards your deposit. Because the two mortgages affect one another, the expected rent, available equity and residential borrowing all need to be considered together.
Keeping your existing property may also affect the property transaction tax payable on your new purchase. The rules differ across England, Scotland, Wales and Northern Ireland, so obtain appropriate tax and legal advice before committing.
Whether it’s your first rental property or the next addition to your portfolio, we’ll compare suitable mortgage options for buying in your own name or through a limited company.
Call 01225 258900Worth knowing
Lenders normally check that the expected rent covers the mortgage interest by a required margin. They may use a stress rate higher than the initial mortgage rate, and the calculation can vary according to the lender, product, applicant and ownership structure.
If the rent falls short of a lender’s standard rental calculation, some lenders may consider surplus personal income. This is known as top slicing and remains subject to the lender’s affordability and eligibility requirements.
If you have four or more mortgaged buy-to-let properties, lenders will generally treat you as a portfolio landlord. They may assess your complete portfolio and request details such as property values, rents, mortgages, assets, liabilities and future plans.
Questions
Lenders typically want at least 20% of the property's value. To access the best rates you usually need 25% or more.
Less than you would think. Buy to let is underwritten mainly on rental coverage, whether the rent covers the mortgage payments with a margin. Most lenders do want to see some minimum personal income, often around £25,000, but it is rarely the limiting factor.
It depends entirely on your tax position and your plans, and you should always speak to a tax adviser before deciding. Limited company mortgages often carry higher rates and fees, but can be more tax efficient for higher-rate taxpayers building a portfolio.
Not all Buy to Let mortgages are regulated by the Financial Conduct Authority. Consumer buy to let, for instance where you inherited a property or are letting your former home, generally is.
Whether you’re arranging a mortgage or protecting what matters, tell us what you need and we’ll explain your options clearly. Your first conversation is free and there’s no obligation.
One of our mortgage advisers will call you back, usually within one working day. If it can’t wait, call us on 01225 258900.
No fee, no obligation
A ten minute chat will tell you what you can borrow, what it would cost, and whether the timing works. There is no charge for it and no obligation at the end.
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