Buy To Let Mortgage Advice - Finding The Best BTL Mortgage Deals
Looking for the cheapest buy to let mortgage deals available? Looking to discuss how to maximize your portfolio?
Want to know more about BTL or Ltd Co Mortgages?…
What percentage do you need for a buy-to-let mortgage?
General rule of thumb is that if you’re looking to purchase a new property to let out (buy to let), most lenders will need a 25% deposit, and therefore max out at 75% LTV (loan to value). Some lenders can offer offer up to 90%, although your options will be limited and additional information is likely to be requested during the underwriting process.
Can I get Interest-Only buy-to-let mortgage?
Yes. Everyone is eligible for an interest only mortgage when it comes to obtaining a buy to let mortgage. Unlike residential mortgages where interest only is typically reserved for higher earners, or those with large savings/pensions to pay back the amount borrowed, buy to let mortgages are seen more as a commercial entity. As the individual(s) won’t be living in the property, the default position is that you can sell the property to pay back the mortgage, without jeopardising the roof over your head.
How do I get a Buy To Let mortgage?
Two main questions we often get are:
What is the criteria for a buy to let mortgage?
How do I turn my mortgage into a buy to let?
In order, standard criteria dictates you typically need an earned income of at least £25,000 (although some lenders don’t require any minimum income levels) and a certain amount of rental income (based on the size of the mortgage). Rather confusing and already sounding like a minefield, and that’s before we consider all other criteria. To help you understand how much rental income you will need to support the mortgage you’re looking for, we’ve created a buy to let calculator.
Click here to use calculator
Moving on to that second question, ‘How do I turn my mortgage into a buy to let?’ - remortgage it. Simple as that. Yes a lot of additional criteria will follow, for example, you will need to be living somewhere else and have records of such, or proof of currently purchasing a new property. Without either, lenders will be worried you will remain living at the property, and therefore a buy to let mortgage would not be applicable.
Taking the above into account, it highlights the importance of understanding criteria, educating yourself and really knowing your options, before you dive into buying, or even remortgaging, a BTL.
So what else needs to be considered?
Additional Stamp Duty
One of the major barriers to entry within the BTL market, is the additional 3% stamp duty on any property that is not your personal residential. This is 3% on top of the normal stamp duty thresholds.
Naturally, this makes it difficult for some as often getting a 25% deposit for a standard buy to let mortgage proves hard enough. With this in mind, planning is crucial. If you’re releasing equity from a property, you need to release enough, otherwise at completion you might be surprised that you still need to find funds.
Tax Implications
Tax on buy to let properties has changed a lot over recent years. From April 2020, you now pay tax on the full rental income, irrespective of whether or not there’s a mortgage on the property, prior to this you could offset the some or all of your mortgage, depending on the type of mortgage. Always speak to a tax adviser first.
Additional tax changes are also on the horizon, whereby landlords need to report and declare taxes on a 3 monthly basis, although this has recently been delayed.
Getting the right advice
It’s easy for anyone to buy a buy to let, it’s easy for anyone to go to a bank and get a buy to let mortgage, what’s difficult is finding someone who understands property, investments, how to make your money work for you, and ultimately has access to all lenders, and all criteria.
At Simple Remortgage, our advisers are highly trained in their craft, they understand landlords are looking for cost effective solutions and have their money work for them. Going to a bank directly, you’ll restrict yourself to a single option.