Buy To Let Mortgages With 15% Deposit
As a general rule, buy to let mortgages tend to be more expensive than homeowner loans. Whilst residential mortgages can often be picked up with a deposit as little as 5%, obtaining a buy to let mortgage usually requires a more substantial deposit.
In general, lenders will tend to ask for a deposit of around 25% of the property’s value when looking to take out a buy to let mortgage. However, providing you meet the lenders' criteria, there are lenders available who are willing to accept deposits of as little as 15%!
Changes to the buy to let regulations
From 2017, changes to how the buy to let mortgage market is regulated will be implemented that may cause landlords to experience difficulty when applying for property finance.
To adhere to the changes, lenders will look at landlords’ applications for buy to let mortgages with more scrutiny than before.
A higher rental coverage: Lenders will now require landlords to have a higher rental coverage than before. In order to secure a buy to let mortgage, landlords will need a rental coverage ratio of at least 145% for a standard buy to let and 170% for a house in multiple occupation.
A stricter income stress test: Lenders will now apply a stricter stress test than before. As a result, landlords will have to prove that they can afford repayments in the event that interest rates increase to 5.5%.
A full review of the entire portfolio: Lenders will now review a landlord’s entire property portfolio before granting a buy to let mortgage. Landlords can no longer spread equity across their portfolio and lenders will not grant a buy to let mortgage if a landlord has a property that is not profitable.
Am I eligible for a 15% deposit buy to let mortgage?
Finding and securing a buy to let mortgage with a lower deposit is likely to be a more difficult process than securing a regular buy to let mortgage. The chances of you securing a buy to let mortgage with a 15% deposit will likely depend on your personal circumstances. Before handing you a mortgage with a reduced deposit, a lender is likely to take the following (along with other factors) into consideration.
Credit Rating – If a lender can see that you have had problems in the past with credit, they might feel less inclined to accept a smaller deposit from you for a buy to let mortgage. It’s worth noting that having a poor credit history does not necessarily mean you will not be able to find a buy to let mortgage at all, it more likely means lenders will ask you for a deposit of around 20-25% of the property’s value.
Age – Lenders tend to view older investors as a higher risk investment, and consequently are likely to ask for a higher deposit when it comes to buy to let mortgages.
How we can help
As lenders who are willing to accept a 15% deposit are more hard to come by than regular buy to let mortgages, you are likely to benefit from contacting a mortgage broker or independent financial adviser. As a mortgage broker, we offer specialist and unbiased advice to assist you achieve your mortgage goals.
We work with the majority of UK lenders, and have access to exclusive buy to let mortgage deals that are not available on the high street, which means we can make that process of finding a mortgage with a 15% deposit that bit easier.
To find out if you might be eligible to obtain a buy to let mortgage with a 15% deposit, why not call us today or fill in our online contact form to request a call-back for a free initial consultation with one of our advisers.