• Buy to Let Mortgages
        Essex Home Finance
      • Buy to Let Mortgages
        Essex Home Finance

      Buy to Let Mortgages


      A Buy to Let Mortgage is a Specialist Mortgage designed for the purchase of a residential property, such as a Flat or a House, for the purpose of letting.

      As a form of Investment, many clients look to buy property to provide an income, or capital growth over time. With the right property you will get both!

      There are many considerations to a Buy to Let Mortgage you need to check for

      • Personal Income

        Be ready to show us your income - Payslips and or Self Assessment - as we need to know what Tax Rate you pay

      • First Time Landlord?

        Most lenders will require you to be a Homeowner, preferably living in a property you own.

      • Portfolio

        Most lenders will require you to be a Homeowner, preferably living in a property you own.

      • Deposit

        Most lenders will require you to be a Homeowner, preferably living in a property you own.

      • Location

        Most lenders will require you to be a Homeowner, preferably living in a property you own.

      • Property Type

        Most lenders will require you to be a Homeowner, preferably living in a property you own.

      Basic Requirements

      A Buy to Let Mortgage is not going to be available to everyone, as there are some basic requirements from Mortgage Lenders to ensure that the mortgage is used for the right purpose.

      Minimum Income - The majority of lenders will require a minimum income, typically £25k per annum or more.

      Property Type

      Whether a Flat or a House, the property needs to be in a condition ready to Let straight away.

      Rental Income

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      Deposit

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      Interest only / Repayment

      Unlike Residential Mortgages, the use of Interest Only Mortgages account for the vast majority of Buy to Let Mortgages, and are perfectly acceptable (even preferred) by lenders.

      Why? Lenders like to see a good margin between the mortgage payment and the rent received, to give you as the Landlord some financial comfort and not have to use your own monthly income.

      Also, should you have any void periods where a tenant may not pay their rent, or you may be between tenants, you will still have to keep paying the mortgage payments, so the ability to keep those payments low, and also to use any surplus funds from previous months, will mean there is no pressure on your own mortgage and day-to-day bills.

      Lastly, the mortgage interest is the only element of the mortgage which is ‘Tax-Deductible’, and not the capital element of a mortgage payment. As such, it just makes it some much easier for you and your accountant to work out how much tax to reclaim.

      You can have a Repayment Mortgage, and for some that is the right thing to do still, but you may be putting yourself through some financial pressure if you do have any financial change.

      Taxation

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      Portfolio Landlord

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      Buy to Let Mortgages are those used for the purpose of buying any type of Residential property, such as a Flat or a House, so that someone else can live in the property, and you can receive a regular rental income from them.

      The process of buying a property for Buy to Let (Investment) purposes is exactly the same as if you were buying your own home. Please read through the Home Purchase or First Time Buyer Pages to see the details of that process.

      With Buy to Let Mortgages and the buying of Investment property, there are some additional areas you need to consider :

      Mortgages

      Some Buy to Let Mortgages are not currently regulated by the Financial Conduct Authority, typically those bought purely for the purposes of investment. As such you will have more limited protection compared to a Residential Mortgage. The majority of Mortgage Brokers have to be Regulated, and will adopt a ‘Regulated’ approach of advice and recommendation, simply to deliver the same consistency of advice whatever type of mortgage it may be.

      Types of Mortgage

      Unlike Residential Mortgages, the use of Interest Only Mortgages is account for the vast majority of Buy to Let Mortgages, and are perfectly acceptable (even preferred) by lenders.

      Why? The correlation between the mortgage payment and the rent received is carefully considered with Buy to Let mortgage Lending, and lenders prefer to have a good ‘gap’ between your monthly mortgage payments and the rent.

      Also, should you have any void periods where a tenant may not pay their rent, or you may be between tenants, you will still have to keep paying the mortgage payments, so the ability to keep those payments low, and also to use any surplus funds from previous months, will mean there is no pressure on your own mortgage and day-to-day bills.

      Lastly, the mortgage interest is the only element of the mortgage which is ‘Tax-Deductible’, and not the capital element of a mortgage payment. As such, it just makes it some much easier for you and your accountant to work out how much tax to reclaim.

      You can have a Repayment Mortgage if you wish, and for some that is the right thing to do still, but just be mindful of what you re looking to do with your investment.

      Rental Income

      The level of rental income is important of course, it’s your income at the end of the day too!

      A Mortgage lender will be looking at your ability to continue to pay the mortgage should interest rates be significantly higher than they are at the moment, and a little extra in reserve.

      Use our Rental Income Calculator to see how much you could borrow based on the rental income estimated for any property you have in mind.

      Your Income

      Although the rental income needs to more than cover the mortgage cost, lenders are looking much closer to the relationship between your declared income and the amount of mortgages you may have.

      Most lenders want a minimum of £25,000 income per year before they will look at a Buy to Let Mortgage for you, but if you have a low declared income and a significant amount of mortgage finance, that may mean you start to struggle to get further finance.

      Deposit

      Typically you will need a minimum of 25% as a deposit on the purchase price of standard property. There are Buy To Let Mortgage Products that require a smaller deposit, however they are normally reserved for property in or close to London, where high rents are being achieved at the moment. These rates tend to be more expensive, so please check with us first.

      Property Types

      There are additional opportunities in the Buy to Let Market to purchase different types of property, such as :

      HMO - Houses in Multiple Occupancy

      Where you have a larger property that is set up for a ‘Per Room’ tenancy, with some shared facilities. Typically the properties are more expensive, but the returns can be greater as well. There is a more limited number of lenders and mortgage options, however the additional rental income you receive more than outlays any extra costs.

      Shops / Offices / Commercial

      Whether a mixed use unit, or a specific shop or office unit, you can get commercial finance for the purchase and subsequent leasing. Please forward us details of what you wish to purchase as each opportunity will need to be assessed on its own merits, and terms may be personally priced.

      Property Condition

      Whatever property you decide to buy, the condition of the property is really important if you need a mortgage to finance the purchase.

      The majority of Buy to Let Mortgage Products are designed for properties that are deemed to be ‘Ready to Let’ almost immediately.

      However, there are an increasing number of properties that are coming to market that need a reasonable level of ‘Refurbishment’ before they could be let, such as a new Kitchen, Bathroom, Decoration, even some structural repair.

      With such properties we will need to consider products designed for Refurbishment - the number of options are quite limited and the cost of the mortgages are a little higher, but if you are buying a property that needs some work then the chances are you are buying at a discount. Please check with us before you look to make an offer on such a property.


      Latest Buy to Let News


      Essex Home Finance Ltd
      1 High Street
      Chelmsford
      Essex
      CM1 1BE

      01245 398466- Office Number

      Security | Essex Home Finance

      Essex Home Finance Ltd is an Appointed Representative of Mortgage Intelligence Ltd which is authorised and regulated by the Financial Conduct Authority under number 305330 in respect of mortgage, insurance and consumer credit mediation activities only.

      Registered address: 1 High Street, Chelmsford, Essex, CM1 1BE. Registered in England & Wales under number 10607263.

      Your home may be repossessed if you do not keep up repayments on your mortgage.

      *From the 1st March 2018, We do not charge any Broker Fees for Residential First Time Buyers, Residential Home Movers, Residential Remortgage, and all Product Transfers (Residential or Buy to Let).

      There will be a fee for all Buy to Let Purchase and Buy to Let Remortgage cases. Typically our fee will be £149, payable on Offer. We will agree any fees with you before we proceed with your case.

      We always aim to provide a high quality service to our customers. However, if you encounter any problems and we are unable to resolve them you can take your complaint to an independent Ombudsman. 

      Our advice is covered under the Financial Ombudsman Service.  You may be able to submit a claim through the  EU Online Dispute Resolution Platform If you live outside the United Kingdom or if you prefer not to deal directly with the Financial Ombudsman Service.