Buy to let mortgage deals are on the up, according to Moneyfactscompare.co.uk. In fact, the comparison chart provider revealed that February saw the number of UK buy to let mortgage deals rise by 239 – up to a sizeable 3,560.
As the buy to let mortgage market bounces back after an erratic couple of years, what do those thinking of becoming a landlord need to think about when it comes to applying for a buy to let mortgage?
As a Guildford mortgage broker that’s been helping landlords in Surrey (and throughout the UK, in fact) get the best buy to let mortgage deals in the UK since we launched in 2005, we have a few pointers.
So, to help incoming landlords get up to speed and ahead of the game prior to starting a buy to let mortgage application, here is our team of Guildford mortgage advisers’ three top picks.
1. Closest isn’t always the best
We have clients that live in Guildford and who require Guildford buy to let mortgages. However, we also have Surrey clients that have purchased properties in the far reaches of the UK. Yes, the ideal scenario is that you purchase a buy to let property near where you live, so that you can deal with any repairs and maintenance (if you’re doing it, of course) with as little stress as possible. If it’s an investment, however, ultimately the most important thing is the yield. If the return on a property in a town in which you live is half that of a property in Scotland, then why not consider Scotland.
2. Get the numbers right
Generally speaking, a lender needs to see that your monthly rental income is at least 25% more than the cost of the monthly mortgage repayments, using a stressed interest rate that is higher than the rate being applied for. In many cases, this can be as much as 45%. As a result, any figurework you’re developing prior to applying for a buy to let mortgage should be based on that. Not only will the lender only lend if the rental vs mortgage figure stacks up, but some of your profit will need to be reinvested for maintenance and refurbishment over the duration of your ownership. So, build in and apportion a generous slice of any rental income for repairs – and other costs such as insurances and tax – rather than thinking that anything over the cost of the mortgage is pure profit.
3. Bigger deposits
When it comes to getting a standard mortgage, the required deposit varies; it can be as little as 5% with the average deposit for a first-time buyer mortgage coming in at around 15%. At 20% to 25%, the deposit for a buy to let mortgage is much higher. However, the good news is that if you have that and you earn a minimum of £25,000 a year, then you’ll meet a large part of a lender’s buy to let mortgage criteria.
The decision to become a landlord is a big one and there are many more aspects to consider before you try and get a buy to let mortgage. As a Guildford buy to let mortgage broker, we can help you by walking you through the process, drawing your attention to the shortcuts and helping you get the best buy to let mortgage deals in the UK.
All you need to do is get in touch.
For award-winning buy to let mortgage advice, contact Complete Mortgages’ team of mortgage advisers in Guildford on 01483 238280 or e-mail info@complete-mortgages.co.uk.
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