Buy to Let: Our Guide to Securing the Right Finance
The criteria for buy to let mortgages are different to what you can expect for a residential mortgage.
If you’re a property investor with an existing portfolio, or you’re purchasing your first rental property and you understand the risks that you are taking with rental property then providing you can meet some criteria you will be eligible.
Our Top Tips
Do your research. Speak to a mortgage adviser who specialises in buy to let mortgages to find out what exactly different lenders will look for, and whether you are eligible. They will have access to the whole market as well as knowledge and experience in this field of lending.
Speak to local letting agents. As part of your research you can find out more about the local market. That means that you can sense check your rental figures with the professionals who will know exactly what you can realistically expect as rental income.
Start to get your paperwork together. If you’re self employed speak to your accountant who can help you with the evidence of your income that you will need. If you’re employed you’ll need the last few months’ payslips. Lenders will ask for between 3 and 6 months worth.
How Buy to Let Mortgages Work
Buy to let mortgages differ from residential mortgages. They are designed for the purpose of renting property as a business rather than borrowing to buy a home. That means that lenders consider that they are higher risk.
Our Top Tips
Run a cashflow forecast. Work out what your income and expenditure is likely to be for your rental property, and how it will impact your personal finances if you don’t have a rental income for a period of time. Take professional advice on this.
Calculate the cost of raising the deposit. You might raise this capital by remortgaging your home. You could secure this through other means of finance, or a family member might have left you a sum of money in their will. include this in your cashflow forecast to make sure you can afford it.
Speak to a professional. There are professional property investment consultants all over the UK.
Buy to let as a business and tax
Your buy to let property is a business. It’s advisable to have a plan in place to repay your mortgage if its interest only. But don’t rely on selling the property to do this. You will be subject to a number of taxes during the course of your business which you need to plan for.
Our Top Tips
Treat your buy to let properties as a business. If you’re making an income from something its a business. You’ll get the most from it and be able to plan for any temporary loss of income, and grow your business
Take specialist financial advice. Speak to an accountant about the best structure for your business, and how you can mitigate your exposure to tax.
Speak to a property investment consultant. They have the expert knowledge and experience to know how to build your business from your first buy to let mortgage to a fully-fledged portfolio.
Our Final Word
So our final tip is to put together your network of professionals: specialist mortgage adviser, accountant, and property investment consultant.