buy to let mortgage swansea

Buy to Let

Whether this is your first investment property, the next in your portfolio or a remortgage of an existing BTL property, we will search the market for a great solution for you.

We have access to a huge selection of lenders with varying lending criteria, so whatever your position contact us and let us go to work for you.

We can look at applications for individuals and limited companies, houses with multiple occupancy and buy to let remortgages. Get in touch today to see what we can do for you.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

MOST BUY TO LET MORTGAGES ARE NOT REGULATED BY THE FINANCIAL CONDUCT AUTHORITY

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Buy to Let

Whether this is your first investment property, the next in your portfolio or a remortgage of an existing BTL property, we will search the market for a great solution for you.

We have access to a huge selection of lenders with varying lending criteria, so whatever your position contact us and let us go to work for you.

We can look at applications for individuals and limited companies, houses with multiple occupancy and buy to let remortgages. Get in touch today to see what we can do for you.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

MOST BUY TO LET MORTGAGES ARE NOT REGULATED BY THE FINANCIAL CONDUCT AUTHORITY

send enquiry
buy to let mortgage swansea

Buy to Let : Things to Consider

How Much Deposit Will I Need

Buy to Let mortgages are viewed as higher risk by a lender and are usually taken on an interest only basis, so they usually require a larger deposit than a residential mortgage. Typically a 25% deposit is required by a lender for a buy to let mortgage, whereas a deposit for a residential mortgage can be as low as 5%.

How Much Rental Income

A lender will typically make a lending decision on a buy to let mortgage based on expected rental income in relation to the mortgage borrowing. The lender uses a calculation known as the Interest Covering Ratio to determine what the rental income should be to cover the mortgage and other costs, such as letting fees and maintenance.on the mortgage

The lender usually requires rental income to be between 125 and 145% of the monthly interest payments, with an addiitional stress test of 5.5% or 2% above the interest rate (depending which is higher).

Here is an example on a £100,000 mortgage with a 135% ICR and stress testing using a 5% interest rate.

(£100,000 x 5%) / 12 = £417 x 130%(ICR) = £542. So in this example £542 per month is the minimum monthly rent required by the lender.

Taking your Personal Income into Account

Lenders will still take your personal income into account to assess whether you will be able to withstand any periods where the property may be vacant.

Sometimes if the monthly income calculation falls short of the lender requirements, some lenders will take into account your personal income when making a lending decision. A lender will assess how much you are earning compared to how much you spend each month. After taking everything into account, if there is sufficient surplus income, this will be added to the expected rental income to decide how much you can borrow.

Land Transaction Tax

In Wales you may need to pay Land Transaction Tax when you purchase a residential property. If you already own a property and purchase a 2nd property or buy to let property property, then the Higher Residential Rates will normally apply.

Higher Residential Rates:

  Up to and including £180,000 0%
  Over £180,000 up to £250,000 3.5%
  Over £250,000 up to £400,000 5%
  Over £400,000 up to £750,000 7.5%
  Over £750,000 up to £1,500,000 10%

This table and commentary is for general interest only and must not be relied on you will always need to take specific advice from your property lawyers, accountants or other financial advisers on tax issues in specific situations

Landlord Responsibilities

As a landlord you will have responsibilities to your tenant. You will need to keep up to date with and follow legislation that maintains the rights of  your tenant. You will also need to take care of any repair work that is required or maintenance of the property. It is important to make sure that you have a contract in place, the correct insurances and safety certificates for the property, not forgetting that you will also need to collect the rent each month.

You can either choose to manage this yourself or you can choose to hire a professional. A property management company will take care of all of these things for you and will also find a tenant in return for a fee.

Why Use a Mortgage Broker?

Mortgages can be confusing, especially when it comes to buy to let mortgages. Different lenders have varying criteria, what you propose may not be possible with one but not a problem for another.

Let us use our expertise to do the hard work for you. Get in touch and tell us what you would like to do. We know the requirements of each lender, so we can quickly tell you who we will be able to place your mortgage with and how much it will cost each month.

Another advantage of coming to us is that we have access to products that may not be generally available if you are browsing online. Some lenders prefer that you use a mortgage broker when sourcing a buy to let mortgage, this means we have access to better rates and can save you money.

Get in touch and we can quickly tell you how much you can borrow, find the right mortgage to fit your plans and tell you how much it will cost. We can also talk you through the process, help you at every step along the way and answer any questions you have.

BUY TO LET BUYING PROCESS

Get in touch with us as early as you can in the process. We can tell you how much you can borrow, how much it will cost each month and how much rental income you will need from the property to be accepted for the mortgage. This information will help you plan what value of house you can look for and what rental income you will need to achieve. We will also help  answer any questions you may have about the buy to let mortgage process.

If you are happy with our mortgage recommendation and wish to proceed, we will go ahead and secure a Decision in Principle with our chosen lender. The Decision in Principle means the lender will agree to lend you the money you need to buy your new home, subject to the information provided being correct and a valuation of the property you intend to buy. Once you have your Decision in Principle you can go ahead and place an offer on your chosen home.

With a Decision in Principle in place you will be in a strong position to go ahead and make an offer on your chosen property.

You have had the great news that your offer has been accepted by the vendor. At this point the estate agent of the vendor may ask to see your Decision in Principle and confirmation of your deposit. You also need to let us know the good news, we will then go ahead and submit your mortgage application to the lender.

You will also need to have a solicitor / conveyancer in place, that will act on your behalf in the purchase of your new property. If you need help with this we can introduce you to an expert in this area that is highly recommended.

Now that your offer has been accepted it’s time for us to submit your mortgage application to the lender. We will need some documentation from you so we can submit certified copies to the lender to support your application.

The lender will then check your application and supporting documentation, verifying that all the information submitted is correct.

The lender will then instruct a valuation of your new property for mortgage purposes. This is normally a basic valuation that will check that there are no significant problems with the property and that it is suitable for mortgage purposes and the mortgage amount proposed.

Once the lender has received a satisfactory valuation report and is happy with the verification checks they have undertaken, it is now time to proceed to mortgage offer. The lender will now send you a mortgage offer, they will will also send us a copy and a copy to your solicitor.

Following acceptance of your mortgage offer, you are nearly there. It is now down to your solicitor / conveyancer to carry out the legal purchase of your new property. They will likely have already completed searches to check that there are no complications with the new property. Your solicitor / conveyancer will draft the contracts required to purchase your new property and liase with the vendors solicitor to set a date for exchange of contracts. 

It’s important to rememeber that you will need to have buildings insurance in place for exchange of contracts. We can help arrange this for you, making sure you have a policy in place to protect your new property.

Your solicitor / conveyancer will have all the contractual documentation drafted ready to exchange contracts with the vendors solicitor. Your solicitor will request your deposit from you and once exchange has taken place you are legally obliged to buy the property. Your solicitor will liase with you and the solicitor of the vendor to arrange a date for completion. On this date the money is transferred between the parties and you will receive the keys to your new property.

WHAT ELSE CAN WE HELP WITH?

buy to let mortgage broker swansea

Property Management

We can introduce you to a professional that can take care of the day to day responsibilites of a landlord and also help keep your property occupied.

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Conveyancing

We can introduce you to a solicitor that we take care of the legal process of selling and buying a new home. The Financial Conduct Authority do not regulate conveyancing activities.

home insurance swansea

Insurance

Let us find the right inurance to protect your new property. You need buildings insurance in place from exchange of contracts, we can arrange this for you and you wont pay us a fee for our help.

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Property Surveyor

A basic valuation of the property by the lender is usually suffcient. However if you want a more in depth report on the property, we can introduce you to a local surveyor that can help with this.

BUY TO LET FAQS

A Buy to Let mortgage is similar to other residentilal mortgages, where a lender will provide the mortgage and your property will provide the security for the loan amount.

The big difference with buy to let is the intended use of the property. If you are buying a property to rent then you must take out a buy to let mortgage, if you rent a property with a residential mortgage you will be in breach of your mortgage agreement.

Another difference in the buy to let process is how affordability is assessed to make a lending decision. A buy to let lender will assess how much you will be able to rent the property for in relation to the level of borrowing. They will also take into account personal income and expenditure.

Generally buy to let mortgage interest rates are slightly higher than the interest rates on residential mortgages. Lenders view buy to let mortgages as higher risk than residential mortgages so this is refelcted in the interest rate.

Another difference is a larger deposit is usually required for a buy to let property. Buy to let mortgages normally require around a 25% deposit, compared to as low as 5% for a residential mortgage. This again is reflective of lenders viewing buy to let as higher risk, another factor is buy to let mortgages are very often interest only.

As a landlord you will be responsible for any repairs or maintenance required in the property that is let. You need to ensure that the correct insurances are in place, such as property and liability insurance and you will also be responsible for gas inspections and the energy performance certificate for the property. You will also need to follow legislation and ensure that tenants rights are maintained, and most important of all, don’t forget to collect the rent each month.

This can vary depending on the lender. Some lenders will have a cap on the number of buy to let mortgages you can have with them, which could be up to 5 in some cases. Some lenders will also have a limit on the total number of buy to let mortgages you can have in your portfolio, including mortgages with other lenders. When you own 4 or more properties you are classified as a portfolio landlord, and there are some lenders that work solely with portfolio landlords.

Buying a property via a limited company can potentially be more tax efficeint if you are a higher rate tax payer, this is something that you should discuss with a qualified tax professional who should be able to provide a detailed comparison. 

However taking a mortgage as a limited company could mean higher interest rates and fees. A full cost comparison would need to be undertaken to see what is the best option for you after taking into consideration potential tax liabilities, interest rates and fees.

Get in touch and we can introduce you to an tax expert that can help you decide whether buying via a limited company is the right option for you.

Let to Buy is when you rent out your existing home and buy a new home to live in as your main residence.

To do this you would convert the mortgage on your existing property to a buy to let mortgage and take out a new mortgage on your new property.

Let to buy is an attractive option for those who may want to move quickly without selling their existing property. This could be due to time restrictions on buying the new property or difficulty selling your exisiting property. You may also want to keep your exisitng property if you are moving away for a period of time with the intention of coming back at a later date.