Each lender has their own individual criteria and limits as to how many buy to let mortgages clients can have, however some lenders have the NO LIMITS to the amount of buy to let mortgages clients can have, which is great for the investors who want to expand their portfolio. The lenders that have ‘No Limits’ in place to how many buy to let mortgages you can have are more specialist buy to let lenders and accessible through buy to let mortgage brokers. It is worth noting that if you hold 4 or more buy to let mortgages you are classed as a Portfolio landlord.
What different types of Buy to let mortgages are there?
There are many different types of buy to let mortgages available and here we try to break this down for you:
- Personal Buy To Let Mortgages –Historically most buy to let mortgages were in personal names and the availability of other forms of ownership was very limited. Although these are still available they are less popular when compared to limited company buy to let mortgages mainly due to the tax changes that have been introduced over the last few years. Personal name buy to let mortgages tend to have cheaper rates and lower arrangement fees when compared to limited company buy to lets.
- Limited Company Buy To Let mortgages – People are able to set up a SPV (Special Purpose Vehicles) limited companies specifically for holding property. Due to the taxation changes that have been rolled out the majority of buy to let mortgages now appear to be set up under a limited company name. These SPV mortgages when compared to personal name mortgages tend to have higher rates and higher arrangement fees although some of these additional costs could be offset vs taxation savings. When considering purchasing a buy to let property getting the correct form of ownership is important, so it is strongly advisable to get property tax advice.
Does the type of tenant affect the buy to let mortgage I get?
The simple answer is yes. As previously mentioned each lender has their own criteria and the type of tenant for some lenders has different risks attached and therefore they may not lend. The types of tenants are:
- Single Person/Couple/Family – Where a standard AST (Assured Shorthold Tenancy) will be or is in place is acceptable to most lenders.
- House of Multiple Occupation (HMO) – This is where the property is let on a per room basis and therefore there are multiple people living within the property. These tenants could be single person/couples or students for example. Depending upon the type of tenant will determine which lender would be able to provide the required mortgage.
- Holiday Let – Is the property going to be let on holiday sites like Airbnb? Due to the high turnover of tenants lenders view this as more risk and therefore not all lenders have an appetite for this type of lending.
Working with an experienced broker, such as The Money Hub, who will have access to both high street lenders and specialist lenders can make sure you get the right deal for your property investment.
What fees are involved with Buy to let mortgages?
The fees payable will depend upon the transaction, for example, a purchase will have a valuation fee and legal fees, whereas on a buy to let remortgage some lenders offer a ‘fees free’ option. Here is a breakdown of fees typically charged that you should look out for:
- Valuation Fee – Payable upfront. The price of this generally depends upon the property value.
- Lender Fee – This can be a flat fee or a percentage of the mortgage amount. In most cases this fee can be added to the mortgage, however if added you will be charged interest on this.
- Legal Fee – This is payable to your conveyancer. Some of this fee maybe payable upfront and some on completion.
- Broker Fee – This could range depending upon the transaction type and the fee maybe payable upfront, on offer or on completion.
All fees should be fully discussed with your broker and be detailed in the illustration provided.
Can you get a buy to let mortgage above a commercial property?
Yes – If you want to buy a flat above a shop there are lenders that can help. Not all lenders are happy with this. An important factor for the lenders that do lend above commercial shops is what type of shop is below and are there any shops either side? If for example, it is a retail shop or an office, then more lenders would be happy with this compared to a flat above a bar/takeaway, however there are lenders that can help and you may need to put down a larger deposit.
If you are looking to buy the freehold which contains both the shop and a flat, then you will need a semi commercial mortgage.
When sourcing the right buy to let mortgage above a shop you should speak with an experienced buy to let broker.
Can you get a buy to let mortgage with bad credit?
There are lenders that will provide bad credit buy to let mortgages if you have marks on your credit file such as missed payments, defaults, county court judgements. The older these marks are and if they are satisfied or not will help your chances of securing a mortgage. Bad credit buy to let mortgages are provided by specialist lenders available through mortgage brokers.
The property is non standard construction – can I still get a buy to let mortgage?
Yes and these mortgages are generally offered through more specialist lenders accessible through buy to let brokers. Properties that are made from concrete, or timber framed are still mortgageable with some lenders. The construction type will determine which lenders can help and what deposit you will need to put down which maybe more when compared to a standard buy to let mortgage.
Is there a limit to how many buy to let mortgages I can have?
With some lenders they may have limits to the amount of borrowing that they will lend to you, however there are lenders that have no limits to the amount of mortgages you can hold with them.
Can Buy to let mortgages be interest only or repayment?
Most buy to let mortgages are interest only as this generates cash flow for the investor. Repayment mortgages are available providing the rental income is sufficient to cover the mortgage payment and a stress test payment the lender will apply.
Have a Buy to Let mortgage enquiry to discuss?
For Buy to Let mortgage advice we are here to help. You can call our office now on 0203 725 5830 or complete the form above where you will then be able to schedule a call.