Buy to Let Mortgages

A buy-to-let mortgage, also known as an investment mortgage, is designed for borrowers who want to buy a property to let out to a third party (e.g. tenants). The amount that the buy to let landlord receives in rent may be over and above the mortgage payments and will help to offset the management and maintenance costs of the property.
Over the past few years, more and more people have taken to investing in buy-to-let property as a long-term opportunity to make profitable returns, as well as a way of securing finance for their retirement plans.

Buy- to- Let Mortgage Criteria

Buy-to-let borrowers are generally faced with extra restrictions and stricter criteria from mortgage lenders.
For example, buy-to-let mortgage lenders base their decisions on whether or not to approve a loan on the likely rental income from the property instead of the applicants' annual income.
This is due to the fact that mortgage lenders require reassurance that their mortgage loans are given for properties that can be expected to grow in value due to their potential to provide income
The majority of buy- to- let mortgages are unregulated but at Thomas George Finance we ensure all our advisor are regulated no matter what the status of the Mortgage.

Popularity of Buy- to- Let Mortgages

In 2006, 10% of all mortgages taken out by UK homeowners (a record £17.5 billion) were buy-to-let mortgages - highlighting growing popularity. In fact, over 152,000 buy-to-let mortgages were issued in the just the first six months of 2006.
The main reasons behind the growing popularity of buy-to-let mortgages include:

• The attraction of having a property as great long-term investment
• Low interest rates - buy to let mortgages offer an attractive alternative investment
• High demand for rental accommodation due to a rise in the overall UK population, high divorce rate, and a growing number of higher education students

Further Guidance

The offering of competitive, specifically-designed, accessible buy to let mortgages by lenders to make life simple for the landlord. Buying a property to let can benefit the private landlord in two ways. Firstly, it can provide a stream of income. Secondly, many buy- to- Let landlords purchase property because of the potential for long-term accumulation of capital growth. This section provides guidance about how to take out a successful buy to let mortgage, the pitfalls that may occur and the knowledge needed to avoid them.

There are 4 main differences in buy to let mortgages: 

• Rent Potential - the decision as to whether or not a mortgage will be offered is usually based on the rent you will earn as well as your income. In some cases your income is not even considered.
• The Tenants Status – the status of the tenant for example, whether they work or claim benefits will influence the lenders decision.
• Interest Rate - buy to let mortgages have slightly higher interest rates.
• Larger Deposit - typically a minimum of 25% or 30% of the property's value is required as a deposit.

Becoming a private landlord should not be seen as an easy way of making easy money. It can be riskier and more complicated. It can also be very time consuming, more than most forms of investment, and there is no guarantee that house prices will continue to rise. That said, having a second property to let to tenants could reap considerable financial rewards over time.
At Thomas George Finance our 20 years linked experience with Thomas George Lettings and Estate Agents plus the background of our advisors who have extensive dealings in the buy- to- let arena make us first choice for advice in this area.

Mortgages and Poor Credit Ratings

More and more people today are experiencing problems resulting from having had financial difficulties in the past. It can be surprisingly easy to be given a bad credit rating which can affect the ability to borrow money far into the future.
Many people can then have problems getting a mortgage or a re-mortgage, often regardless of their current financial situation. Some lenders may automatically reject an application from someone with a poor credit rating. The rejection itself may then in turn be recorded as part of the credit rating which can then make it even more difficult to secure a loan or a mortgage.
However, mortgages and re-mortgages are available for those with credit problems, IVAs, CCJs and past or current bankruptcy; but it is a good idea to approach a specialist mortgage provider to avoid damaging a credit rating any further. Our mortgage advisers are experienced in dealing with providers who are sympathetic in this situation and can offer a fair deal, rather than take advantage of the fact that options may be limited.
Please use our Mortgage Enquiry Form below and one of our experts will contact you. Alternatively, you can give us a call on 02920 877866. 

Please note that the FSA do not regulate some forms of Buy To Let mortgages/Commercial Finance.