Buy to Let Mortgages For Multi-Units
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Buy to Let Mortgages for Multi Units
How buy to let mortgages work
To all intents and purposes, a buy to let mortgage operates in a very similar way as a standard residential mortgage. You can choose from a range of buy to let mortgage offers, including fixed rate, variable rate, and tracker mortgage deals.
However, for anyone looking to secure a buy to let mortgage it is important to note the changes in 2017.
The 2017 changes will affect the way the buy to let mortgage market is regulated, which might make it more difficult for landlords to secure buy to let mortgages.
Firstly, landlords can no longer spread equity across their entire portfolio. This means that if a landlord has one or more properties that are not profitable, then the lender will not provide the finance required. As a result, lenders will require an in-depth look at a landlord's property portfolio before making their decision to provide the buy to let mortgage.
Secondly, lenders will require a higher rental coverage ratio than before. Prior to the 2017 changes, applicants only needed a rental coverage ratio of 125% of the monthly mortgage payments. In order to secure a buy to let mortgage, applicants will now need a rental coverage ratio of 145% for normal buy to lets and 175% for houses in multiple occupations.
Finally, lenders will apply a stricter income stress test. Not only will applicants need a rental coverage ratio of at least 145%, but they will need to prove that they can afford mortgage payments in the event that interest rates increase to 5.5%.
Multi unit freehold blocks
A multi-unit property (multi-unit freehold block) is a singular building with numerous independent, separate residential units that are owned under a single freehold title. An example of a multi-unit property is a block of flats. Multi-unit properties are popular amongst experienced investors, as they often provide cash flow benefits during empty periods.
How to find a buy to let mortgage for your multi-unit property
Finding a high street lender willing to offer buy to let mortgages on multi-units has its difficulties, and the specialist providers that do provide these loans often have wide qualification criteria and can be more expensive. Consequently, finding the right buy to let mortgage for your multi-unit freehold block can prove tricky, but there are two actions you can take to make the process easier:
Conduct your own research and shop around- Similar to purchasing any financial product, it is important not to jump at the first deal you find. A buy to let mortgage is a huge investment, and it is important that you get the deal most suited to your personal circumstances.
Gain advice from a mortgage broker or independent adviser - Conducting your own research is vital. However, finding the right buy to let mortgage deal for your multi-unit needs can often can often be overwhelming. That is why it is often a good idea to contact a financial adviser to analyse your situation and give you assistance in achieving your mortgage goals.
For a no obligation discussion about your buy to let requirements, contact us directly on 0117 403 4474 or request a callback.