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Buy-to-Let Mortgages

If you’re looking to secure a buy-to-let mortgage, then look no further than Simmonds Mortgage Services. We can help you with residential or commercial buy-to-let property purchase and remortgage, whether you’re looking for your first investment or looking to grow your existing portfolio further.

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Looking to build your property portfolio?

We work with a huge number of portfolio landlords and can help you to find the best mortgage deal to increase your rental income and help you build your portfolio into a sound and profitable investment.

What is a buy-to-let mortgage?

A buy-to-let mortgage is specifically used to purchase property to rent out to tenants, whether that’s residentially or commercially. There are a number of key differences to residential mortgages, which you will need to be aware of if you are planning to become a first-time landlord.
  1. Most buy-to-let mortgages are interest-only, as this allows you to keep your costs low
  2. You will typically need a deposit of at least 25%
  3. Buy-to-let mortgages are not regulated by the financial conduct authority (FCA) – unless you rent them exclusively to a close family member
what is a buy to let mortgage

Buy-to-let Mortgage Eligibility

Criteria for buy-to-let mortgages vary, but there are some general criteria that apply to most:

buy to let mortgage eligibility

Minimum rental yield

All lenders will be looking for the buy-to-let property to achieve a minimum monthly rental income (or rental yield). This is actually what the loan amount is calculated based on, so it’s important to bear this in mind when searching for properties.

Most lenders will be looking for your rental property to achieve 125% of the mortgage repayments each month, and this can rise to as high as 145% for portfolio landlords and those in higher tax bands.

Property type and location

As buy-to-lets are investment properties, lenders are going to be more interested in the property type, as they will want to know it’s in demand, particularly in the area where you are planning to let it out.

Not all lenders will accept certain types of property and/or certain types of tenants, for example, HMO (House of multiple occupancy) properties are less popular with high street lenders, especially larger HMOs that require a license.

If you’re therefore looking at student lets or similar multiple occupancy rentals, there will certainly be fewer lenders available to you. This is why it’s important to approach a broker with knowledge in this lending niche, such as ourselves.

Be a homeowner

Many lenders will expect you to already own your own home when you become a buy-to-let landlord, however, there are an increasing number of lenders that are willing to look at first-time buyers for a buy-to-let mortgage.

Deposit

A larger deposit is generally needed for this type of mortgage, and it’s unlikely that you will be able to purchase a buy-to-let property with a deposit lower than 25%, although there are a handful of lenders that would consider a minimum deposit of 20%.

The good news is, as this is a commercial transaction, lenders are more willing to consider other assets to secure your borrowing, aside from a cash deposit. This could be another portfolio property or perhaps a private business premises.

Standard mortgage criteria

As well as the above criteria that are specific to buy-to-let mortgages, you will also need to meet the more typical personal circumstances related criteria applicable to any mortgage application, such as being a UK resident, minimum and maximum age limits, income requirements, and affordability, and a good credit score.

Buy to let mortgages for landlords

Berkshire and it’s surrounding areas are a strong choice for those looking to invest in property, as the monthly payments possible in the area are substantial in both residential and commercial property. Here at Simmonds Mortgage Services, we can help you to find a deal with mortgage payments that help you maximise your rental income.

Whilst the purchase prices are also at the higher end of the spectrum, having an interest-only mortgage will allow you to make the best use of your rental income, whether that’s to repay sooner, or expand your portfolio.

First-time landlords

First-time landlords will find it easier to get a buy-to-let mortgage if they can evidence knowledge of property rental and if they already own a home, however, it’s perfectly possible to purchase a buy-to-let as a first mortgage.

You will likely need to provide mortgage lenders with a rental quote from an ARLA-registered letting agent for residential buy-to-lets and evidence of how you will make the mortgage payments when the property is vacant.

We can help you to find a mortgage lender who is more sympathetic to the needs of a first-time landlord and secure you the best interest rates available for your circumstances. In time, you can grow your portfolio with our help and guidance.

Property Portfolio landlords

If you already have a portfolio of properties, we will help you to access a mortgage lender who is willing to offer another mortgage at a competitive rate.

Most lenders have a limit on how many active mortgages any one applicant can have, however, some lenders are much more flexible than others.

If you’re looking to use your other assets as security, we’ll match you with a mortgage provider who will accept the type of asset you have available.

Limited Company?

If you’re looking to purchase your buy-to-lets through a special purpose vehicle (SPV) in order to maximise your income tax efficiency, we can help you to secure a mortgage with the right lender for you.

This will depend on the lender. High street lenders tend to shy away from portfolio lending (a portfolio landlord has 4 mortgaged properties or more) but others have a maximum value of all properties currently mortgaged.

Specialist lenders tend to be more flexible, so allow up to 10 mortgages for buy to lets and others have no upward limit, however, you will need to meet the affordability criteria for all properties.

There are a few differences in how these two types of mortgage work, but the main difference is that a residential product cannot be used if you intend to rent out the property and a buy-to-let cannot be used if you intend to live in it.

Another key difference is that residential mortgages are regulated by the financial conduct authority, whereas buy to let are not, as they are considered commercial purchases.

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Get in touch with us by calling 0118 469 3037 for a free chat about your specific circumstances. Let us help you secure your dream home.

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