Buy-to-let Mortgages

Buy-to-Let Mortgages

A Buy-to-Let Mortgage allows prospective landlords to buy a property and let to tenants. Some landlords are motivated by generating additional income, whilst others buy with the ambition of achieving capital growth on their investment property. Some want a combination of both, and others see buy-to-let as a full-time career and wealth accumulation vehicle.

How much can I borrow?

Buy-to-let mortgage lending is primarily based on how much rental income a property will generate. Lenders want to see enough rent to cover your mortgage payments plus a margin above (allowing for tax, void periods and associated costs). As long as you are financially stable, have a sufficient deposit (typically 25%) and have a good credit rating, there’s no reason why the right property can’t be purchased with a buy-to- let mortgage.

When should I start?

Speak to us when you’re considering buy-to-let. We can provide you with a good idea of how much you can borrow based on your individual circumstances and any property you may have found.

Whether you’re a first-time landlord or an experienced property investor, talk to us and get the right advice

IMPORTANT

A mortgage is a loan secured against your home or property. Your home or property may be repossessed if you do not keep up repayments on your mortgage. Most forms of Buy to Let Mortgage are not regulated by the Financial Conduct Authority.

How can Plato help?

With over 20 years experience in buy-to-let, we can offer meaningful discussion so as to help you make informed decisions about whether buy-to-let is right for you. Some people discover that becoming a landlord is not as attractive as it first appears. Others are enthused by it and want to build a portfolio of property with a view to achieving financial freedom. It very much depends on your character, tax situation, attitude to risk, time availability and other factors.

As Independent Mortgage Brokers, we can help you find the most appropriate loan to suit your new investment property and strategy. We have experience and knowledge about which lenders to approach based on each deal, as well as access to a range of buy-to-let mortgage products that are not available directly to the public.

How much of my time will this take?

Just 3-4 hours (approximately) over two meetings (phone or face to face) will save you many more hours of work. You won’t need to try and speak to every lender yourself, or try to establish who will lend to you and under what terms: we do all of this for you. This means you are free to spend your time doing what you do best.

Where should I buy my investment property?

You don’t necessarily have to buy an investment property close to where you live (unless it makes financial sense to do so). With so many services available, plus modern technology, you may be able to purchase further afield than you might imagine. Especially if you are not going to live there. A wise approach is to look at areas which satisfy buy-to-let investment fundamentals. This includes things like good transport links (trains/buses/airports), good schools / hospitals). You should also ask yourself a number questions. How is the local economy? Is it booming, and are larger businesses and shops moving into the area or closing down? Which type of tenant are you aiming for? Professionals, families, students, social housing tenants? What type of lifestyle is on offer in the area you wish to buy in, and how does that match with the profile of your prospective tenant? Coffee houses, restaurants, shopping, schools, gym? All of these factors need to be considered before you target an area to buy in?

Should I buy a buy-to-let property in my own name or via a company?

Given the recent tax changes, many landlords are considering buying in a Limited Company rather than in their personal names. We strongly recommend that you obtain independent tax advice to ensure that you’re setting up a new buy-to-let property in a manner that is right for you. Once you are clear on which is best, we can undertake our research and match you to the most suitable lender with the best interest rates for you.

As Independent Mortgage Brokers we can find the best deal for your investment property

How long does it take to buy?

Typically, 2-4 months, but every buy-to-let purchase differs. The biggest advantage you have is that you are normally not dependent on a property sale to purchase your investment property. This effectively makes you ‘chain free’ and potentially more attractive to a seller. Whilst there are lenders who can produce a mortgage offer in a matter of days, it’s the work undertaken by the buyers’ and sellers’ solicitors which tends to add the most time to completing the transaction. With our decades of experience, we’ll support you throughout through the buying process and help to push everything along until you collect the keys to your new property.

I already have a Buy-to-let Mortgage with another lender, can you help?

Potentially yes. As a first port of call, we would ask you to contact your existing lender to understand exactly what type of mortgage deal you have in place and if not, what they may be able to offer you in terms of a new deal. Once you have this information, we can undertake a fair comparison of your existing mortgage versus the best buy-to-let mortgages on offer for your circumstances. Our goal would be to save you money or to reduce your mortgage term. You may also wish to increase your mortgage amount (assuming there is sufficient equity in your property) so as to provide you with funds to undertake improvements to your investment property, or to raise funds so as to expand your buy-to-let portfolio.

Can I rent my current home and buy a new place to live in?

This may be possible based on your individual circumstances. If your current home has an existing residential mortgage, then you would need to obtain permission from the current lender to let your home (this is almost always stipulated in the terms and conditions of a residential mortgage). They may decline this request or possibly agree and keep the same terms. They may agree and amend the terms of your loan, for example, charge a higher interest rate and add some additional conditions to your mortgage. It may be more suitable to consider a Let-to-Buy Mortgage . Contact us for more details on the most suitable solution for you.

We have over 20 years experience as buy-to-let landlords

With so much new Government legislation and changes to taxation, it’s never been more important to seek professional advice so that you can make informed decisions

We can remain in contact throughout the term of your mortgage to ensure you always benefit from the best rates

What is the buy-to-let Mortgage Process?

1

Contact us for an initial discussion about whether Buy-to-let is right for you. We can provide you with a more accurate indication of how much you can borrow, the types of property you can afford, plus an indication of all purchase and setup costs.

2

Read books, listen to podcasts, speak to other landlords, friends and family. Take some time to learn about buy-to-let and decide if it’s right for you.

3

Obtain independent tax advice to understand the taxation of buy-to-let income and capital gains.

4

If you’re still reading, it looks like you’re thinking of going for it! Armed with sound advice from us and others, start looking at areas and properties, obtaining information on price and potential rental income. Buying a buy-to-let property is different from buying a home to live in. You’ll then need to ensure that what you’re buying will generate sufficient income and be desirable enough to attract good tenants. The more areas and properties you visit, the more of an expert you’ll become in what a fair market price will be, as well as understanding rental demand.

5

Once your offer to buy has been accepted by the vendor, you can contact us so that we can complete and submit a mortgage application to the most suitable lender.

6

Instruct a solicitor to start conveyancing work for your investment property purchase.

7

The lender will send a surveyor to the property to ensure that the agreed purchase price is indeed a true reflection of the property’s market value. For an additional cost, the surveyor can also undertake a more detailed survey of the property’s condition and / or structural condition. (This is often recommended for older properties). As you are purchasing for letting purposes, the surveyor will also provide an indicative rental income for the property. These are the amounts the lender will use when making a final decision on your application.

8

Assuming the lender is satisfied with the property being purchased and the information you’ve provided with your application form, they’ll issue a Mortgage Offer Letter, which typically remains valid for 6 months. If your purchase is taking longer than this, we either obtain a revised offer letter from the existing lender or consider what’s available elsewhere.

9

Once both seller and buyer’s solicitors are happy with all legal aspects for the property they will ‘Exchange Contracts’, and typically undertake ‘Sale Completion’ a few days thereafter unless both parties agree a later date.

10

Once the property purchase completes, you can walk to the Estate Agents and collect keys for your new investment property.

11

It’s time to get your place ready to let. This may include some refurbishment and if you decide to let as a furnished property, it’s time to find suitable furniture for the type of tenant you want to attract. Creating a comfortable living space increases your chances of tenants staying longer which should mean fewer empty periods for you.

12

You will also need to obtain all necessary certification depending on government legislation at that time. These would include things like a Landlord’s Gas Safety Certificate and Energy Performance Certificate (EPC). The onus will be on you to fulfil your legal requirements as a landlord.

13

It’s a good idea to open a separate bank account for each investment property you own to help with the financial management of it. Your accountant will also be grateful for this when undertaking your tax returns.

14

You are ready to market your property to let. You may want to instruct local Lettings Agents or let the property yourself with the help of online letting services. There are pros and cons to each, which we’ll be happy to guide you in. Agree terms and sign a tenancy agreement.

15

Congratulations, you’re now a landlord!

16

We urge all our clients to be excellent landlords, treat your tenants fairly and with respect. Keep your property well maintained and you will be rewarded with good rental income and tenants who want to remain in your property beyond the initial rental contract term.

Important information

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