A buy to let mortgage broker will help you find the most suitable buy to let mortgage based on your borrowing needs, the buy to let property you intend to buy and the available mortgage products on the buy to let market.
The Buy to let mortgage market is a vast one and requires some specialist knowledge when choosing mortgages dude to the different considerations that need to be taken into account. E.g Is the investor using a limited company to purchase the property, what are the tax implications etc.
For these reasons a buy to let mortgage broker can help an investor choose the right type of mortgage which could be the difference between seeing a return or not.
Most buy to let mortgage brokers charge fees but there are a few who are fee free and are happy to work off the lender’s commission.
You can use a buy to let mortgage calculator to see how much you may be expected to pay on your buy to let mortgage.
Buy to let mortgage broker fees
Most buy to let mortgage brokers may not charge fees based on the size of the mortgage but the ones which do will charge a fee based on the size and complexity of the case. These BTL brokers may charge between £500 and £1000 or even more in some cases or they may charge between 2-3% of the mortgage being sought. BTL broker fees for secured loans and 2nd homes can be even higher.
What do you need for a buy to let mortgage?
Your buy to let mortgage broker will advise you on your specific circumstances but to be eligible for a buy to let mortgage you will usually need to take into consideration the below things:
- Your credit history: Having good credit will ensure you get a favourable buy to let mortgage rate as most buy to let mortgage lenders will choose to only lend to investors who have an acceptable credit score. If your credit score is down you can look to build credit before applying for a buy to let mortgage.
- The buy to let property: Your buy to let mortgage broker will advise you on how your property type affects the number of buy to let mortgage lenders who may be willing to lend to you as most buy to let mortgage lenders have a strict lending criteria. This means a property that is too far away from the standard buy to let property may require a specialist mortgage broker to source you mortgage lenders who are willing to lend on that property.
- Age: Most buy to let mortgage lenders will only lend to people from the age of 25 but some reduce this to 21 and some even go as low as 18. The typical maximum age for a buy to let mortgage lender is 75.
- Residence of investor: Most buy to let mortgage lenders will require that the investor resides in the UK although there are a handful of BTL lenders who will be able to fund an expat investor. Your BTL mortgage broker will be able to assist you with this.
- Borrower status: Most buy to let mortgage lenders will lend to a particular type of investor and discount others, your buy to let mortgage broker will be able to point you towards BTL lenders who will look at your case.. You may be a first-time buyer, first time landlord, experienced landlord or professional landlord depending on the requirements of your buy to let mortgage lender. Not all BTL lenders deal with investors with huge portfolios so you may need a specialist BTL lender if this is you.
There are various specialist buy to let mortgage brokers, they include:
- Non-standard property lenders
- Bad credit lenders
- Later life BTL lenders
- Complex income BTL lenders
- Different tenant type lenders
- Experienced landlord lenders
If you fit into any of these categories then a specialist buy to let mortgage broker may be able to assist you in getting your mortgage at a favourable rate and avoid the risk of getting rejected by a standard BTL lender.
Most high street buy to let mortgage lenders will only lend on properties built with brick and mortar. Anything beyond this may need to be handled via a specialist buy to let mortgage lender. Non-standard properties may include homes but with the following:
- Thatched roofs
- Timber frames
- Listed buildings
- Log-style cabins
Bad credit BTL lenders:
These lenders will deal with investors who may have had one or two blemishes on their credit scores and history. These blemishes may stop you from being eligible to the typical high street BTL lender and may require specialist knowledge to place your case for the best possible results.
People who may fit into this criteria could be those with any of the below within the past 3 years.
- Debt management Schemes
- Payday Loans
- No credit history
- Low credit score
- Late payments
- Missed mortgage payments
- Country court judgements(CCJs)
- Individual voluntary agreements (IVAs)
Later life BTL lenders:
As mentioned above most high street mortgage lenders will not lend to anyone above the age of 75 but a specialist buy to let mortgage broker may be able to source lenders who are willing to lend to you if you are over 75.
Complex income BTL lenders:
Most mortgage lenders will look for applicants who are in full employment and take home a wag. Anything outside of this scope may require a specialist buy to let mortgage broker to assist in finding mortgage lenders who may be best suited to your needs. The situation gets even more complex if you meet more than one of the criteria below:
- Self-employed earnings
- Contractor work (including Ltd company workers and umbrella company employees)
- Pensions and other investments
Different tenant type lenders:
The type of tenants your property may already have or you may be seeking to attract could significantly affect your chances of getting a buy to let mortgage. Most BTL mortgage lenders will prefer clients whose tenants are signed on to assured shorthold tenancy agreements.
Tenants who fit into the below bracket may be classed as complex and require a specialist mortgage broker:
- Student lets
- Tenants receiving DSS rental support
- Short-term tenants
- Tenants on non-standard contracts
Experienced landlord lenders:
Most BTL lenders will restrict the number of properties or BTL mortgages an applicant may have and most lenders will not deal with portfolio BTL investors. If you are an investor with experience then your BTL mortgage broker may be able to place your case with a suitable lender.
How to ensure you get the right buy to let rates?
Ensuring you are on the Best Buy to let mortgage is always the best way forward. You should avoid taking fraudulent actions such as renting out a property with a residential mortgage or residing in a property which you have gotten a buy to let mortgage for. Both of these actions could cause you to lose your mortgages as you may be in breach of your mortgage agreement.
Most people will get a buy to let mortgage to:
- Benefit from the property appreciating in value
- Benefit from the rental yields
Regardless of what your motivation is the right buy to let mortgage will likely be the difference between making a profit or a loss and this is the key reason why an experienced buy to let mortgage broker is key.
Are Buy to let mortgages rates higher than residential mortgage rates?
Yes, buy to let mortgages are usually at or around 25% whilst residential mortgages can vary from between 2% to 10% based on your mortgage affordability.
How many Buy to let mortgages can you have?
You will really only need 1 buy to let mortgage which can cater for more than 1 property, however, most buy to let mortgage lenders will only lend to as high as 4 properties. Anything over 4 BTL properties is considered a portfolio and there may be particular BTL mortgage lenders which your Buy to let mortgage broker may refer you to based on your suitability and their excellent fit to your needs.
Getting an overseas Buy to let mortgage:
Overseas buy to let mortgages can be very complicated and hence specialist mortgage advice may be needed.
You may be able to finance your overseas buy to let mortgages in one of the following ways.
- Remortgaging a UK-based property to purchase a BTL overseas
- Borrowing from a UK bank that offers loans for overseas purchases
- Arranging an overseas mortgage from a lender based in the country in question
If you need financial advice and you live in the UK then you could contact the Money Advice service over the phone or via chat for impartial advice.
You can also contact the debt charity “Step Change” if you are in debt and need help.