Buy to Let Mortgage Best Buys
Whether you’re an experienced landlord or a first time buyer looking to get a foothold on the buy to let property ladder, you might have noticed that the buy to let property market has shrunk considerably over the last few years. However, if you know where to look there is still plenty of lenders and great deals to be had on your buy to let mortgage needs
Research the market
The first cause of action you should take when looking to find your perfect buy to let mortgage deal is to research the market. Ensure that you are familiar with all of the costs associated with purchasing a buy to let mortgage and the typical price you might expect to pay. The more you know about the market, the more likely you will be able to pick out a good deal when you see one.
Familiarise yourself with the 2017 changes
There have been many changes to the tax rules and regulations regarding the buy to let market.
From 2017, landlords can no longer deduct the financial cost derived from their buy to let properties when calculating their profit for a self-assessment tax return. This means that landlords all around the country can expect an increase in their tax bill at the end of the financial year.
As the tax changes are not applicable to limited companies, many landlords are looking to set up their own ltd to avoid the new tax rules. However, there are associated costs in setting up a limited company that should be considered before any action is taken.
From September 2017, changes to the way that the buy to let market is regulated will be implemented.
In order to adhere to the regulation changes, lenders will review landlords’ applications with more scrutiny than before.
Firstly, the lenders will review the mortgage affordability. Landlords will have to pass the lenders’ strict income stress test and show that they can make mortgage repayments, even in the event that the interest rates increase to 5.5%.
Secondly, lenders will require landlords to have a rental coverage ratio of 145% or 170% (depending on the buy to let property). Landlords will not be able to simply raise the rent to achieve a higher ratio; they will have to provide a valuation from a professional surveyor.
Finally, landlords can no longer spread equity across their portfolio. Lenders will review a landlord’s entire portfolio before deciding whether to grant a buy to let mortgage. If a landlord has one or more properties that do not provide a profit, then a lender will reject their buy to let application.
If you walk into your bank or building society and take out the first mortgage deal you see, it is unlikely you will receive the best potential offering you could have had on your buy to let mortgage. Spending a considerable amount of time looking around online could save you considerable amount of money in the long run.
Speak to a good independent mortgage broker
Mortgage brokers work with lenders and often have access to exclusive deals that are not available on the high street. As a result, contacting a mortgage broker can greatly benefit you by weighing up all of your available options. A good broker can help you select the deal that best suits your buy to let mortgage needs. Getting a buy to let mortgage is a big investment, so it is key that you get unbiased, expert advice.
We have a team of specialist buy to let advisers, experienced in finding the best deals on the buy to let mortgage market. In addition to offering you expert advice, we have access to a range of exclusive buy to let mortgage deals not available on the high street.
For any advice on finance for purchasing or remortgaging property in a limited company, please call our buy to let mortgage advisory team on 0117 403 4222 or fill in our form to request a call back.