Specialist Buy to Let Mortgage Broker
A buy to let mortgage differs from a residential mortgage for a property that you, yourself, will be living in. Buy to let mortgages are usually offered on an interest-only basis, which means your monthly payments will only cover the interest and not the capital debt. The capital debt will only decrease if you make additional payments or if you specifically choose a repayment mortgage.
Buy to let mortgages usually require a larger deposit and may also have upfront fees or a higher rate of interest than a similar residential mortgage. Most lenders will also expect a down payment of between 25 to 40% of the property value. There is often a larger stamp duty fee payable on a second home too. Town & Country Mortgage Services have online affordability calculators to help you determine what you might be able to borrow.
One of the key things to look for when comparing buy to let mortgages is the maximum loan to value ratio, or LTV rate. The LTV rate is the difference between the value of your property and the deposit you’re putting down. For example, if the maximum LTV rate a lender will accept is 75%, then you will need a deposit of at least 25% of the property’s value.
There are different types of buy to let mortgage to consider; fixed-rate, discount variable, or tracker mortgage. The rates you’re offered may also change depending on how much you expect to earn from your rental property. A buy to let mortgage broker can explain each of these options to you and advise you on which is best suited to your requirements and budget, so you don’t have to worry about paying more than you can afford. Town & Country Mortgage Services are specialists in this field and we’ve helped countless customers with their buy to let mortgages, so we can provide you with in-depth guidance and access to the best deals for your investment.
Buy to let mortgage costs
A useful feature of your buy to let mortgage is the Annual Percentage Rate of Charge (APRC), which is the total mortgage costs as a percentage if you were to keep the mortgage for the full term. Many people see buy to let properties as exclusively a source of income once they’ve made the purchase, but there are additional costs to consider besides your mortgage payments each month. It’s not just the mortgage rates and arrangement fees that are higher with buy to let properties – stamp duty fees are also higher, costing 3% more for a buy to let property than a residential home. You will also need to factor in the normal costs of conveyancing fees and surveyor costs. The way that landlords are taxed has changed in recent years and there are now new taxes on buy to let landlords that are currently being phased in, so you should research these regulations before making any purchases.
As most buy to let mortgages are interest-only, you need to consider how you will pay off the capital debt, such as calculating how much debt you will have remaining if you choose to sell the property at a later date. These are all details that can be overlooked if you’re dealing with the mortgage process alone, so it can be helpful to have a professional on your side to talk you through the various caveats and nuances of purchasing a buy to let property.
How do Town & Country Mortgage Services work?
Town & Country Mortgage Services are an award-winning broker and FCA registered, so you can rest assured that your home buying experience will be in the hands of experienced professionals. We offer free advice for our mortgage and protection advice with a simple and convenient process to provide you with all the information you need as someone going through the home-buying process for the first time.
The first step in working with one of our brokers is to arrange a 30-minute telephone call to discuss your current circumstances and what you’re looking to buy. We’ll then run an affordability check with you to gauge your borrowing potential. This will help us in recommending potential mortgage lenders who you could work with. We’ll put together an Agreement in Principle which is an estimate that shows estate agents or vendors an indication of what you’re able to borrow.
With an Agreement in Principle in place, you can begin viewing properties within your budget and even make an offer if you find the right home for you. If your offer is agreed, Town & Country Mortgage Services can then begin making more specific recommendations on the right lenders and mortgage products for your needs, and take full responsibility for the management of your mortgage application going forward.