Buy to let mortgages are designed specifically for people who would like to purchase a residential property for the purpose of letting to tenants.
These mortgages are not regulated by the Financial Services Authority, although the lenders are Regulated and Authorised by the FSA. What does this mean to you; well put quite simply "let the buyer beware"!
In the case of a residential mortgage, the broker has to beware, in that it is he that has to prove that the advice given was appropriate for your circumstances. Buy to Let mortgages, although secured on a property with residential usage, they come are under the same regime as a commercial finance.
The transaction is viewed as commercial, and the onus is on you to get it right; no second chances and no ombudsmen to get you out of the hole that you may have dug yourself! When looking for the best buy to let mortgage, remember that the lowest rate may not be available to you. Lenders have very lengthy criteria guidelines, which are about as flexible as a concrete bridge. You either fit or you don't, it's as black and white as that.
At this juncture, let us look a look at few examples of criteria that can catch out the uninformed. Ultimately the size of a buy to let loan is driven by two things. Driver number 1 is the loan to value ceiling imposed by the lender. This can vary depending on the style of property. For example "new build" can attract lower loan-to-value. Such conditions are there to give the lender some comfort in the event that they have to repossess. This is usually born out of poor experience with that style of property.
Driver number 2, is a second safety margin applied to the rent required for a given loan size, to take account of periods when the house may be empty. Lenders apply a rental coverage calculation and these vary considerably between lenders. For example, a common calculation would be that the monthly rent has to cover the monthly mortgage by at least 125% at an interest rate which is not necessarily what you pay but is based on higher, forced rate of interest, say 4.99%.
One of the biggest changes recently is the greater detail that lenders have placed on your personal situation. For example, most lenders, but not all, require you to have a minimum persona, frequently that you are asked to prove. It can be as high as 40K. This personal income criteria has nothing to do with whether the case works on paper as far as investment is concerned, its simply that lenders policy decision.
Most Buy-to-Let lenders will allow you to have your mortgage on a pure interest only basis if you choose. they understand that their loan will be paid back in a lump sum at the end of the loan period or by sale of the property. However some best buy deals require you to have a repayment mortgage. This necessarily means that your monthly payment is higher and may not fit in with what you want to achieve.
Beware also about age limits. Although Buy-to-Let is an investment and not the roof over your head, some lenders still apply a maximum age for repayment of the loan and for some it as low as 69yrs of age. However there are also some who have no age limit at all Geographical limits apply regularly. Some of the smaller regional lenders offer great rates but only lend in their immediate vicinity.
Some lend only in Northern Ireland, some will not lend in Scotland.
Always be careful with the introductory interest rate offered by a lender. When that introductory period is over you will pay their standard variable rate, and difference in some of these is huge; for example 4.25% and 6.25%. The rate at the top of the list might not turn out to be a good deal at all.
Generally, the conditions associated with buy to let loan acceptance has become a long list and seems to be ever growing. There are lots of "ah but" reasons not to lend. The cynics in our community believe that the lenders don't really want to lend, so this is a good way to stop lending, without actually having to say that we have no money.
Now to the subject of price comparison websites; we have tried these and come out more confused; if you no what I mean! The problem is that these sites can only really crunch numbers; you are in fact simply interest rate shopping. This can, in some cases, end up costing you more, due to abortive costs, when your case fails the survey that you have paid for, maybe on a construction type; it is another opportunity for a lender to say "ah but".
What you will not see on some of these sites is that there are many of the best buy to let deals that are not available direct to the public but are offered through specialised mortgage wholesalers that only brokers have access to. Those wholesalers have special deals with lenders.
Finding a good buy to let broker is now more difficult than ever; they are a rare breed indeed. Their numbers have been driven to the margins in the last few years, as the lenders turned off the lending tap. There are now under 10,000 mortgage brokers left. Many Mortgage Brokers specialised in Self Certified and Sub Prime residential mortgages, this market that has now closed; and so have these brokers.
Most of the brokers that we have found are specialist people, that have a good knowledge of the Buy to Let market, which is probably the reason that they are still around. Having made a few phone calls, we found that for straightforward BTL loans most brokers did not make any charge, and those that did, charged admin of £ 100 or less. This is a far cry from some of the obscene broker fees of £2k-£4K being charged by some of the less reputable brokers a few years ago. What a difference a few years and a recession makes!
The conclusion is that to get the best buy to let mortgage deal, don't spend hours on search sites, or go blind reading a plethora of boring mortgage publications, let a good whole of market mortgage broker can get you the best deal for you, and make life so much easier.
Enhanced Wealth are a whole of market mortgage broker specialising in buy to let mortgages and investment mortgages.
These mortgages are not regulated by the Financial Services Authority, although the lenders are Regulated and Authorised by the FSA. What does this mean to you; well put quite simply "let the buyer beware"!
In the case of a residential mortgage, the broker has to beware, in that it is he that has to prove that the advice given was appropriate for your circumstances. Buy to Let mortgages, although secured on a property with residential usage, they come are under the same regime as a commercial finance.
The transaction is viewed as commercial, and the onus is on you to get it right; no second chances and no ombudsmen to get you out of the hole that you may have dug yourself! When looking for the best buy to let mortgage, remember that the lowest rate may not be available to you. Lenders have very lengthy criteria guidelines, which are about as flexible as a concrete bridge. You either fit or you don't, it's as black and white as that.
At this juncture, let us look a look at few examples of criteria that can catch out the uninformed. Ultimately the size of a buy to let loan is driven by two things. Driver number 1 is the loan to value ceiling imposed by the lender. This can vary depending on the style of property. For example "new build" can attract lower loan-to-value. Such conditions are there to give the lender some comfort in the event that they have to repossess. This is usually born out of poor experience with that style of property.
Driver number 2, is a second safety margin applied to the rent required for a given loan size, to take account of periods when the house may be empty. Lenders apply a rental coverage calculation and these vary considerably between lenders. For example, a common calculation would be that the monthly rent has to cover the monthly mortgage by at least 125% at an interest rate which is not necessarily what you pay but is based on higher, forced rate of interest, say 4.99%.
One of the biggest changes recently is the greater detail that lenders have placed on your personal situation. For example, most lenders, but not all, require you to have a minimum persona, frequently that you are asked to prove. It can be as high as 40K. This personal income criteria has nothing to do with whether the case works on paper as far as investment is concerned, its simply that lenders policy decision.
Most Buy-to-Let lenders will allow you to have your mortgage on a pure interest only basis if you choose. they understand that their loan will be paid back in a lump sum at the end of the loan period or by sale of the property. However some best buy deals require you to have a repayment mortgage. This necessarily means that your monthly payment is higher and may not fit in with what you want to achieve.
Beware also about age limits. Although Buy-to-Let is an investment and not the roof over your head, some lenders still apply a maximum age for repayment of the loan and for some it as low as 69yrs of age. However there are also some who have no age limit at all Geographical limits apply regularly. Some of the smaller regional lenders offer great rates but only lend in their immediate vicinity.
Some lend only in Northern Ireland, some will not lend in Scotland.
Always be careful with the introductory interest rate offered by a lender. When that introductory period is over you will pay their standard variable rate, and difference in some of these is huge; for example 4.25% and 6.25%. The rate at the top of the list might not turn out to be a good deal at all.
Generally, the conditions associated with buy to let loan acceptance has become a long list and seems to be ever growing. There are lots of "ah but" reasons not to lend. The cynics in our community believe that the lenders don't really want to lend, so this is a good way to stop lending, without actually having to say that we have no money.
Now to the subject of price comparison websites; we have tried these and come out more confused; if you no what I mean! The problem is that these sites can only really crunch numbers; you are in fact simply interest rate shopping. This can, in some cases, end up costing you more, due to abortive costs, when your case fails the survey that you have paid for, maybe on a construction type; it is another opportunity for a lender to say "ah but".
What you will not see on some of these sites is that there are many of the best buy to let deals that are not available direct to the public but are offered through specialised mortgage wholesalers that only brokers have access to. Those wholesalers have special deals with lenders.
Finding a good buy to let broker is now more difficult than ever; they are a rare breed indeed. Their numbers have been driven to the margins in the last few years, as the lenders turned off the lending tap. There are now under 10,000 mortgage brokers left. Many Mortgage Brokers specialised in Self Certified and Sub Prime residential mortgages, this market that has now closed; and so have these brokers.
Most of the brokers that we have found are specialist people, that have a good knowledge of the Buy to Let market, which is probably the reason that they are still around. Having made a few phone calls, we found that for straightforward BTL loans most brokers did not make any charge, and those that did, charged admin of £ 100 or less. This is a far cry from some of the obscene broker fees of £2k-£4K being charged by some of the less reputable brokers a few years ago. What a difference a few years and a recession makes!
The conclusion is that to get the best buy to let mortgage deal, don't spend hours on search sites, or go blind reading a plethora of boring mortgage publications, let a good whole of market mortgage broker can get you the best deal for you, and make life so much easier.
Enhanced Wealth are a whole of market mortgage broker specialising in buy to let mortgages and investment mortgages.
