Buy To Let

Buy-to-lets, consent-to let, let-to buy… make any sense? If not, let’s help you. There are quite a few different paths to the buy-to-let market and how to go about this so please enjoy our brief overview. As always, it is far more beneficial to discuss this in person so please pick up the phone. In the meantime, have a look at our points below.

What is a buy-to-let?

Well, you typically buy the property to let it out and make some money (either through capital growth or rental income) and this would make you a landlord. Your property may be repossessed if you do not keep up repayments on your mortgage. Not all Buy to Let Mortgages are regulated by The Financial Conduct Authority

What type of landlord will you be?

If you have decided to let out the property that you currently live in and move into a new property or have inherited the property, this would make it a consumer buy-to-let.

If you have never lived in the house and have got it purely to rent out, then this would be an investment buy-to-let.

So what’s the difference?

The Financial Conduct Authority is the conduct regulator for nearly 60,000 financial services firms and financial markets in the UK. If you have a consumer buy-to-let it means it’s regulated by the FCA. This is because when you bought the property you did not enter the contract to let it out.

If you have bought the property purely to let out, then it is a non-regulated buy to let. Put simply: a regulated loan is regulated by (FCA), whereas an unregulated loan is not. This means that consumers, (you) are protected from incorrect advice or miss-selling from lenders or brokers. Unregulated loans don’t have this protection.

Can I have a buy-to-let?

If you’re a first-time buyer, then it can be harder…quite a bit harder. There are very few FTB options on the buy-to-let market. If you currently own a property, then it’s a lot easier as there are far more options available.

Deposit/Loan to Value

As a minimum, you will need to put down a 20% deposit. But, the reality is there aren’t many options available with 20% and they can be quite expensive. To get competitive deals, you will want to put down at least 25% of the property value.

How does affordability work?

It is different from the residential side of the market as they are assessed differently from lender to lender and overall. Some lenders have no minimum requirements, some need you to be earning a set amount and this will vary from lender to lender.This is alongside the rental income for the property being a big consideration. The lender’s requirements for rental yields vary case by case and lender by lender. So please give us a call to discuss further.

What should I be thinking about?

Everyone will have their take on this but once you have decided that you want to buy a buy-to-let, have decided that you can afford it, you should ask yourself “what type of tenants do I want”? Do you want a typical professional couple or family, or an HMO? How long do you want the tenancy agreement to be for? Why does it matter? Have you looked into how you will manage these? Again, give us a call and we can guide you through the criteria and information you need to know before making a decision.

Is buy-to-let the right option?

How different are they from your typical residential mortgage?

So, you’ve bought your first buy-to-let, you love being a landlord and you’ve decided you want to buy more and you’re thinking “where do I go from here?” OK, let’s start this process again. The same rules as before apply with regards to deposit amount and affordability requirements. But where do you want to go from here? If you want to keep growing your portfolio, have you considered putting the buy-to-lets in a limited company? We are not tax advisors so we cant advise you on the ins and outs of this but we believe your first step should be to speak to an accountant and have them take you through the pros and cons so you know where to start. The above applies to all buy-to-let mortgages.

Consent to Let

This is where your current lender allows you to take your current mortgage with you to your new property and may potentially allow you to ‘top up’ your mortgage to borrow more if needed.

Let to Buy

A let-to-buy is where you remortgage your residential property, release some cash to put down a deposit on a new home, and then let out the current property. Again, a great option for some people who don’t quite have enough deposit to buy the next home but have enough equity in the current property.

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