Buy To Let
- Residential Investment Properties
We have many years experience in obtaining funding for the purchase of residential investment properties. This type of property investment is often described as 'Buy-to-let.' To be eligible for funding within Buy-to-let schemes, the purpose of the properties must be for letting to residential tenants on assured short hold tenancy agreements. All proposals are considered. We are particularly interested in securing finance for clients planning to acquire quality properties in areas where market intelligence predicts good prospects for capital appreciation.
- Investment Strategy - Buy now at low prices
With the current very low interest rates, buying an investment property with a mortgage is a very attractive proposition. We obtain suitable "Buy-to-let" and commercial mortgage loans and advise clients in planning property portfolio strategies. With careful selection of suitable properties, investors are looking for the potential of steady capital gain due to rising values over time as well as a good net yield on their own funds invested. Properties may be sold eventually, in order to free capital and realise the gain for fresh investment. On the other hand, when a property has risen in value, it may be refinanced to release new capital for further ventures.
Since 2000, Mortgage Market found itself to be receiving many Buy-to-let enquiries in previously unmatched numbers as the potential for this form of investment became more widely appreciated. Mortgage Market organised itself to meet this demand and now has a large number of clients that are building and adjusting their portfolios. We have developed specialist knowledge and expertise in property investment. With property values in many locations significantly reduced following a deep correction in valuations over this last two years, property prices are now very attractive for investors with funds available for deposits.
- What type of project can be considered?
The simplest proposals relate to single property single occupancy schemes. At the other end of the Buy-to-let spectrum are portfolios with many properties, perhaps including 'multi-lets,' where a single building may for example contain a number of flats or HMOs (Houses of multiple occupation).
- Need the property already be tenanted?
Not necessarily. For 'Buy-to-let' funding, some lenders do require that a property is either already let or could be let immediately on completion. However, other lenders will consider lending on properties which require alteration or conversion whereby the property may not be ready for letting at completion.
- How much can be borrowed?
A general requirement for a Buy-to-let is that the income stream from the rental should fund a certain percentage of the mortgage payments. The test applied varies depending on the particular lender. For example, to ensure a margin for amongst other things, property maintenance and interest rate changes, a lender may require that the rentals cover up to say 125% of the mortgage payments. Where the property is not currently let, then a professional rental assessment will be required commenting on the potential for letting the property and determining the rent that could be obtained. An additional test is that the purchaser can afford their existing commitments. Currently lending is available up to 75% of the value of the property.
- How much deposit is required?
The deposit required by an investor will depend upon the lender and the scheme, being typically say a minimum of 25% for property values up to £500,000 though for some new build schemes higher deposits may be required. For properties with values above £500,000, higher percentage deposits are likely to be required. With some schemes, additional security, say in the form of other properties or endowment policies with significant surrender values can be used to increase the loan available. Some lenders will allow interest only mortgages on Buy-to-let loans.
- How do I know whether my proposal will fit the guidlines?
The guidelines provided above are 'rule of thumb' only. We receive e-mails requesting general information on Buy-to-let schemes. However as there are various schemes available from different lenders, and, as available schemes change constantly through market conditions, no hard and fast rules can be provided. This does mean, however, that there is variety in the market from which we can source finance suitable to any particular applicants and their projects.
If you have a proposal in mind, please do not hesitate to contact us with your project details.