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Dec 04

Property and the “Buy to Let” mortgage

If you intend to purchase a property to rent out then you will require a “buy to let” mortgage. If you intend to raise capital from a property that is to be rented, in order to purchase another property, you will require a “let to buy” mortgage.

Either way, the borrowing is secured against the property to be let out and the amount you can borrow is normally dictated by :
The deposit that you are putting down in the case of a purchase,
or the equity in the property in the case of a re-mortgage.
Your borrowing potential is very strongly linked to the amount of rental income to be received however earned income can be used to top it up.

In addition to rental income, there are a number of different factors that can influence a lender’s decision to lend. These include, but are not limited to:

The type of property being purchased – Ex local authority, studio/high rise flats are some examples of property that lenders may find unacceptable
The type of proposed tenant – Some lenders do not accept students, some won’t accept DSS
The type of tenancy agreement – Most lenders insist on a minimum six months assured short hold tenancy
Whether there are any licensing requirements – Certain properties are subject to mandatory HMO* licensing
The borrowers personal financial circumstances – Some lenders require a minimum level of income
Employment status – It may be possible to purchase a buy to let as a ‘house person’
Age – Some lenders have minimum and maximum borrower ages
Mortgage history – It may not be possible to borrow from some lenders if you do not have a current residential mortgage
All lenders offering Buy To Let mortgages differ in their approach and the buy to let market is becoming ever increasingly complicated due to the rapidly changing economy. We will examine all of your options and present them to you in order to come to an informed decision on the most efficient way to proceed.