Buy to Let Mortgages for New Build Flats
Buy to let mortgages for new build flats
Some lenders are wary of offering buy to let mortgages on new build flats.
The majority of buy to let lenders will now not allow remortgages until a property has been owned for at least 6 months, to ensure the true value of the property is accurately established.
However, more recently lenders have started to offer buy to let mortgages to new build flats with similar rates as older properties. Therefore, the process of obtaining a buy to let mortgage on new build flats may not seem as much hassle as it used to be.
Changes to the buy to let mortgage market
In 2017, new rules in the way the buy to let mortgage market is regulated came into effect.
As a result, lenders have changed the way they consider applications for buy to let mortgages that may make it more difficult to secure a buy to let mortgage.
Traditional lenders will apply a stricter income stress test. Lenders will now require applicants to be able to afford mortgage payments in the event that interest rates increase to 5.5%. This could make it more difficult to secure a buy to let mortgage, as landlords will need more disposable income to satisfy the lenders’ stress test.
In previous years, landlords only needed a monthly yield (or rental coverage ratio) of 125%. From 2017, landlords are required to have a rental coverage ratio of at least 145% for a buy to let property or 170% for a house in multiple occupation property. In addition, it will not suffice for the landlord to simply state how much they intend to charge in their application; lenders will only accept a valuation from a professional surveyor.
It is important to note that any landlords with multiple properties cannot spread equity across their portfolio. Lenders will no longer provide buy to let mortgages to landlords who have one or more properties that are not profitable. Therefore, lenders will no longer look at properties in isolation and they will review the landlord’s entire property portfolio upon application.
How much will I be able to loan?
The majority of mortgage providers have a maximum loan of up to 60% of the property’s value for new build flats, which is considerably more than that of an older property. However, there are still some providers that are willing to offer up to 75% of the property’s value, dependant on how oversubscribed they are within the subject block.
How can I find the best buy to let mortgage deal for me?
Similar to any financial product, it's best to shop around to try and find the best deal for you. However, we also advise that you speak to a mortgage broker. A good broker may be able to give you advice and offer you buy to let mortgage deals that are not offered on the high street. At Fair Mortgages, we have a team of specialist financial advisers experienced in finding buy to let mortgages on new build flats.
If you would like assistance or advice from an independent mortgage adviser, you can contact us directly on 0117 403 4474 or alternatively, fill in our online contact form to request a call back from our buy to let advisory team, who can provide you with a free initial consultation about buy to let mortgages for new build flats.