Buy To Let
What is a Buy to Let mortgage?
A Buy To Let Mortgage is a mortgage loan secured against a property that is rented / let out to a third party(s) by the applicant (borrower) and is not lived in / occupied by the borrower. It can otherwise be known as an investment mortgage, investment property mortgage or a commercial mortgage.
Enquire about a mortgageIn calculating the affordability of a Buy To Let Mortgage, lenders will make an assessment of the rent ability of the property, and assess the expected rental value per month - i.e. how easy they feel it will be to rent the property out, and what the expected / anticipated monthly rental income will be. Different lenders use different rental equations / calculations, but the standard is that the anticipated rental income must equal 125% of the monthly mortgage payment. Some lenders will take the applicants income into consideration also if the rental cover is tight. Although there have occasionally been 90% LTV products available on Buy To Let products, the minimum deposit tends to be 15% (a maximum LTV of 85%).
Most buy to let mortgages are not regulated by the Financial Services Authority.
We believe the best advice is independent mortgage advice!
Buy 2 Let
Buy to let mortgages are now available from plenty of mortgage lenders: banks, building societies and specialists. Many potential landlords use a mortgage broker to find them the best buy to let deal, as it can save time.
Investing in property can be very lucrative, but it is essential that you do your homework and research the options: What type of property should you buy? Should you use a lettings agent? What mortgage rates are available?
Buy To Let Steps & Procedure
- Work out the deposit available. You can only borrow up to 85 per cent loan to value, so your deposit will determine your price range
- Get advice from a local estate agent about types of property most likely to be let in the area and the level of rents paid
- Put an offer in on the property you want. Once it has been accepted, commission a valuation
- If the property is old you should commission a Homebuyers Report or full structural survey
- Instruct your solicitor to carry out the purchase and provide them with details of the property, the estate agent, seller and your lender
- Lender receives valuation report and, if all is in order, agrees the mortgage
- Solicitor carries out local authority search and confirms legality of title
- Pay the deposit, sign and return the contract and the solicitors will exchange contracts. You are now legally committed to the sale
- If the property is freehold you must get adequate Buildings Insurance immediately
- Get any quotes for building or renovation work and decorating that may be necessary
- On completion day call the seller's estate agent to pick up the keys. The property is yours to let
- Get the builders and decorators in as soon as you can. Advertise for tenants just before the work is completed. (Or engage the services of a letting agent to do this for you)
- Arrange to meet prospective tenants and show them the property once it is ready
- If you find suitable tenants arrange for them to supply you (or agent) with employer, bank and personal references. Check these.
- Get a deposit of one month to six week's rent to confirm the tenancy.
- Make last minute check that the property meets health and safety requirements and write a comprehensive inventory
- Draw up a tenancy agreement
- Contact utility companies and the council to arrange for bills to be transferred to tenants' names.
- Hand over the keys.