Buy to let mortgages can be exciting for anyone and if you have thought about the prospect of taking the leap and are about to become a first-time buyer buy to let investor then there are a few things you should know about the buy to let mortgage process for first-time buyers.

Getting a mortgage as a first-time buyer can be very hard as most buy to let mortgage lenders want to see that you have some degree of experience before they will agree to lend to you.

This means they may insist that you already have a residential mortgage which you have made regular repayments on before they will offer you a mortgage as a first-time buy to let mortgage borrower.

The mortgage lenders who will lend to you as a first time buy to let investor are by default not very many.

This means you may need to meet stricter eligibility requirements to get a buy to let mortgage and you may have to deal with buy to let rates that aren’t competitive.

You may also have to put down a higher mortgage deposit due to your status as a first-time buyer buy to let.

What mortgage deposit will you need as a first-time buyer buy to let?

You will be required to put down a mortgage deposit of between 20 and 60% in some cases for mortgage lenders to consider your application.

This is because as a first-time buyer buy to let investor you may not have as much experience in the buy to let market and many lenders may view this as a risk.

Once you have settled down and a few months or even a year has passed you may find that you have better options in terms of remortgaging your buy to let mortgage which you obtained as a first-time buyer.

How much rent should you charge on your first-time buyer buy to let property?

Most mortgagre lenders will want to see rents of 125% to 140% of the monthly mortgage repayment. This will give mortgage lenders the confidence that you are able to cover your monthly mortgage repayments.

Dont forget your buy to let repayments won’t be the only costs you will have to deal with.

You may have to deal with insurance on your buy to let, maintenance costs, property tax etc.

If you also plan to use a letting agent to manage the property then you should also be aware or at least conscious that they may have fees that you have to deal with.

You will also have to pay stamp duty, a mortgage valuation fee, a mortgage application fee and a conveyancing fee during the mortgage application and most likely after you have received a mortgage offer.

What documents will you need for your first-time buyer buy to let?

You will need pretty much the same documents that may have been required of you for a residential mortgage.

  • Proof of income: so payslips, bank statements, tax returns, a record of accounts( if you are getting your buy to let through a limited company)
  • Identification documents: so passports, driving license and a utility bill.

What are the criteria for a buy to let mortgage?

Buy to let mortgage lenders will focus on the rental income being derived from the property.

Does the rental income cover the mortgage payments? If so then all should be fine.

Some buy to let mortgage lenders will also have a minimum income requirement before they will lend to you This will vary among lenders and you should seek independent mortgage advice from a buy to let mortgage broker if this concerns you.

Some buy to let mortgage lenders will also impose a minimum age restriction on their buy to let mortgage product range. A buy to let mortgage lender may insist that you will have to be at least 25 before they will lend to you.

Interest rates for buy to let mortgage could be much higher than residential mortgages but this is due to the fact that they are much riskier.

Buy to let mortgages will offer interest-only mortgages. With these mortgages, you will only make a interest repayment for the mortgage term and then make the capital repayment at the end f the buy to let mortgage in one large sum.

Before a buy to let mortgage lender will offer you an interest-only mortgage they will like to see that you have a suitable capital repayment plan or vehicle. As a first-time buyer buy to let investor, it may be unlikely that most buy to let mortgage lenders will offer you an interest only buy to let mortgage.

Can you get a first-time buyer buy to let with bad credit?

Getting a buy to let mortgage with bad credit may be much hard but not impossible.

A bad credit mortgage broker may be able to assist you in getting your buy to let mortgage but as a first-time buyer with bad credit, you will need to have made more effort to show mortgage lenders that you can repay the mortgage in full and that your bad credit behaviour is now behind you.

Bad credit buy to let mortgages may be possible but you risk having a high APR mortgage in comparison to what may be available in the market.

Bad credit could be:

  • A CCJ
  • An IVA
  • A debt management plan
  • A default
  • A bankruptcy
  • A home reposession

Can I get a buy to let mortgage with no income?

It is very unlikely you will be able to get a bad credit mortgage with no income. Most buy to let mortgage lender will expect the borrower to have enough income to cover the monthly repayments in the case where there are months without tenants or tenants who default on their payments for several months.

Can I use help to buy for buy to let?

No, you cannot use the help to buy scheme for buy to let investments as this scheme is for first-time buyers who cannot afford to get on the property ladder.

John Bate

John has 22 years of experience in financial services. This spans across financial research, financial services (As a qualified mortgage broker and underwriter), financial trading and sales at global investment banks. While working as a publishing research analyst, he covered European bank credit and advised institutional clients on investment strategies at both JP Morgan and Societe Generale. John has passed all three levels of the CFA (Chartered Financial Analyst) programme.