We thought it might be useful if we listed the questions
most frequently asked by our prospective/existing
Landlords. Our dedicated Buy to Let team are happy
to answer any questions you can think of.
How is the amount I can borrow calculated?
What Loan to Value ratio can I expect?
Is it the right time to buy more property?
I've heard about gearing, what is it?
Can I just remortgage for a better rate?
What happens if I have no accounts, or
they show little profit?
What happens if I have adverse credit?
Are any properties excluded?
What about Commercial Property Investment?
What if I have DSS, Students or Asylum
Seekers in my properties?
How is the amount I can borrow
calculated?
Buy to Let mortgages are usually calculated with
the anticipated rental income in mind. Some lenders
also use personal income as a part of the calculation.
What Loan to Value
ratio can I expect?
Typically investment mortgage lenders offer 85% of
the property value with the purchaser committing the
other 15% as a deposit. There are however a number
of lenders who will offer 90% LTV.
Is it the right time
to buy more property?
If you are taking a long-term outlook it is always
a good time to buy: property in 10 yrs time will almost
certainly be worth more than it is now. Also, if you
feel property is about to fall in value, now is the
time to remortgage and get ready to gear up, taking
advantage of cheaper prices when purchasing.
I’ve heard about
gearing, what is it?
If you have equity in a property, you can release
it by remortgaging and use it as deposits for further
properties. For example, a property purchased for
£100k with an £85k mortgage which is now
worth £160k, could be remortgaged to 85% of
its current value, releasing £51k in cash. Splitting
this into two deposits and arranging new 85% mortgages,
you can buy two more properties of the same value,
TRIPLING the size of your portfolio. This concept
applies no matter what size your existing portfolio.
Can I just remortgage
for a better rate?
Absolutely! If you have not had your portfolio arranged
by a specialist Buy-to-Let Broker, it is probable
that there are rates that you were unaware of and
therefore quite likely that a better deal can be arranged
for you.
What happens if I
have no accounts, or they show little profit?
No problem! Many of the dedicated Buy-to-Let lenders
appreciate that you wish to pay as little tax as possible,
and are therefore concerned only that the rent achievable
on the property covers the mortgage payment by a certain
amount. If it does, then they are happy to accept
your own declaration of Income, and not ask for certified
accounts.
What happens if I
have adverse credit?
Again, no problem. There are lenders who appreciate
that anyone can go through hard times, and will take
a sympathetic view. The rates are also nowhere near
as penal as they used to be, with some lenders not
loading the rates at all!
Are any properties
excluded?
No! Although some lenders insist on an unchanged house
as their security, many will happily accept houses
converted into flats, HMOs, bedsits, flats above commercial
premises, blocks of flats etc. Obviously, any property
must be in a suitable condition for mortgage purposes.
What about Commercial
Property Investment?
A large number of our Landlords who have started
in the Residential Sector look to broaden their Portfolio
as they expand - one way to do this is with Commercial
Property. It can be very lucrative, with potentially
less risk, as a Corporate Tenant may sign for 15-25
years and will both insure and repair the property
themselves, dependent on the terms of the lease.
What if I have DSS,
Students or Asylum Seekers in my properties?
Again, although some lenders perceive these tenants
as more of a risk, others appreciate that this market
can give excellent returns and are happy to lend.
