Buy to Let Mortgages
Fox Davidson are a specialist buy to let mortgage broker. Voted as best UK mortgage broker in 2017 and 2018 we provide our clients with expert advice and strategy for financing buy to let properties in the UK. We secure finance for all types of clients on all types of property.
What is a buy to let mortgage?
A buy to let mortgage is a loan secured on a property that you will let out. You can rent the property to a family, to individuals or to a company. When compared to a main residence mortgage you will find that the mortgage rates and fees are typically higher on a buy to let mortgage. A loan amount for a buy to let mortgage is based both your income and also on the rental income the property will achieve.
What are the typical lending terms for buy to let mortgages?
As an independent buy to let mortgage broker Fox Davidson have access to the whole of the UK buy to let mortgage market. We have access to thousands of products and each lender has their own varying criteria. As a rule the following lending terms apply for buy to let mortgages:
- Maximum loan to value up to 80%
- Interest only or capital and interest
- Loan based on the subject property rental income and/or your personal income
- Fixed, tracker and variable rate options
- Loans from £100,000 with no upward limit
How much can you borrow on a buy to let mortgage?
The amount you can borrow on a buy to let mortgage will depend on your personal income and the market rental income of the buy to let property. Some buy to let mortgage lenders will work out the maximum loan using just the rental income. If you have a large personal income you can often borrow substantially more using a lender that calculates their maximum loan using both personal and rental income.
Buy to let mortgage calculator
Each lender will work out how much you can borrow in a different way. We would need over 50 different calculators on this site to show you the difference. Fox Davidson will complete a fact find with you and using our knowledge of the market we will match you with the correct lender for the loan amount you require.
As a rule, the following calculation can be used:
Monthly rent x 12 to annualise it. Divide this number by 140% and divide that number by 5.5%
The above calculation is your worse case scenario. The Prudential regulation Authority (PRA) increased the rent to loan calculations to take account of tax increases for landlords in 2017 onwards. The new regulations resulted in lenders amending their rent to loan calculations and most lenders settled on the above calculation.
Despite the PRA buy to let mortgage changes made in September 2017 you can borrow more if you buy in a limited company, have a large personal income, take a 5 years fixed rate, or use a lender not affected by the PRA criteria.
Large buy to let mortgages
A large buy to let mortgage is considered as borrowing above £1 million. Many high street banks will not lend above £1 million and therefore specialist large mortgage buy to let lenders will be utilised. The large buy to let mortgage lenders include specialist buy to let lenders and private banks.
Large buy to let mortgages are based on the rental income and/or your personal income. For high net worth clients wishing to finance large buy to let mortgages we can use a blend of rental income and your personal income to achieve lending of up to 5 x your gross annual income.
Compare buy to let mortgages
As a specialist buy to let mortgage broker we have access to all types of buy to let mortgage lenders. We compare buy to mortgages from the whole of the market.
We can finance:
- Buy to let mortgages for first time landlords
- Buy to let mortgages for first time buyers
- Buy to let mortgages for limited companies
- HMO mortgages
- Student Let buy to let mortgages
- Multiple units on one freehold
- Buy to let mortgages for British expats
- Buy to let mortgages for foreign nationals
- Commercial property buy to let mortgages
- Corporate let buy to let mortgages
- Large buy to let mortgages of £1 million plus
- Mortgages for Holiday lets
Why you should use a specialist buy to let mortgage broker
As a specialist buy to let mortgage broker we have an in-depth knowledge of all UK buy to lenders. A buy to let mortgage broker can finance all types of buy to let property and for all types of client. Fox Davidson were voted as best UK broker in 2017 (money age awards) and 2018 (mortgage strategy awards) and were finalists in the best buy to let mortgage broker in 2016 (mortgage strategy awards).
We work closely with our clients to ensure we fully understand your property investment goals and objections to ensure we pair you with the right lender and the right buy to let product.
Using a buy to let mortgage broker gives you immediate access to high street banks, building societies, private banks and specialist, broker exclusive buy to let lenders.
At Fox Davidson our aim is to provide our clients with expert, independent buy to let advice and strategy. Working with a buy to let mortgage broker will save you time and money.
What is the stamp duty rate for buy to lets?
The rate of stamp duty for buy to let is higher than for your main residence. An increase of 3% is applied to each banding of stamp duty. Please refer to the table below:
|Buy to let and second home Stamp Duty tax bands|
|Brackets||Standard rate||Buy-to-let/second home rate (1st April 2016)|
|Up to £125,000||0%||3%|
|£125,001 – £250,000||2%||5%|
|£250,001 – £925,000||5%||8%|
|£925,001 – £1.5m||10%||13%|
Can you switch to a buy to let mortgage?
It is possible to switch your main residence mortgage in to a buy to let mortgage. Lenders will need confirmation that you will move out of the current property. You will be required to be moving into a new main residence which may be a rental property or mortgaged.
Can you live in a house with a buy to let mortgage?
Buy to let mortgages are currently unregulated by the financial conduct authority (FCA). Main residence mortgages are regulated by the FCA. The two types of mortgages do not mix and therefore you are unable to take out a buy to let mortgage if you will intend to also live in the property. The way around this is to take out a main residence mortgage and request permission to rent rooms out to lodgers. Some lenders will allow you to have lodgers.
Can you rent out your house without a buy to let mortgage?
If you will be moving out of your main residence and wish to rent out the property you have two options. Firstly, you can remortgage the property on to an official buy to let mortgage. The second option is to contact your current lender and request ‘permission to let’ or ‘consent to let. Most lenders will be understanding of your changing circumstances and allow you consent to let. The term of the consent to let will very with each lender. Some lenders will charge a fee and some lenders will increase the interest rate or switch you on to one of their buy to let products.
Can you release equity on a buy to let mortgage?
You can release the equity you have in a buy to let property. Buy to let lenders will lend up to 80% loan to value. There are several ways to do this and they are; buy to let remortgage to a new lender, further advance of money from the existing lender and a second charge buy to let mortgage.
Can you have an interest only repayment buy to let mortgage?
Interest only buy to let mortgages are an widely available across many of the buy to let mortgage lenders. You can take out an interest only buy to let mortgage up to 80% loan to value. The method of repayment for an interest only buy to let mortgage is often from sale of the property at the end of the term.
Buy To Let Mortgage Broker
A mortgage is a loan secured against your home or property. Your home or property may be repossessed if you do not keep up repayments on your mortgage or other debt secured on it. The FCA do not regulate most forms of Buy to Let mortgage.