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Our property investment expert is Jeni Browne, Sales Director at
Mortgages for Business
www.mortgagesforbusiness.co.uk
Tel: 0345 345 6788
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Question
My mum is moving abroad and wants to pass her buy-to-let property and the mortgage over to me. I already own my own home, with my husband, which is mortgaged but which we have more than 80% equity in. I also work full time and so does my husband. Mum has owned the buy-to-let property on an interest-only basis for 15 years so there is still not a great deal of equity – 40% approx. Will I be able to take on this kind of mortgage and what kind of paperwork will I need to support my application/transfer?
Answer
In terms of your ability to get a buy to let mortgage, this all sounds absolutely fine. Invariably, you will need to provide documents to prove who you are, where you live and how much you earn (eg passport, utility bill and payslips). Your mum will also need to write a letter to confirm that she is ‘gifting’ her equity in the property to you, and that this gift is neither interest bearing or repayable. One thing to keep in mind – she will need to transfer the property at its full value and you will pay stamp duty (with a 3% surcharge) on this figure.
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Question
I have read recently that properties in university towns have seen generous price growth in the last three years which is good news for me as I have decided to buy my first buy-to-let in Southampton, where my daughter is at university. I would like to buy a flat for her and a friend to live in while they are studying. The idea is they will pay me a nominal rent for the year and after this time I will let the flat out to tenants. Will I still need a buy-to-let mortgage for the first year and where do I stand in terms of getting a mortgage when my daughter is the tenant. I will be getting a 40% LTV mortgage and the property is likely to cost between £170k and £210k.
Answer
Buy-to-let loans are not currently regulated because they are usually considered commercial transactions. However, if you rent the property to family, the transaction becomes personal and so falls under regulated lending rules. Because of this, there are not many buy-to-let lenders that will accept family members as tenants. You might be able to get a residential mortgage which would be cheaper but you would have to check that the lender would be happy with lodgers too. When you are ready to let the flat out to tenants you could then refinance onto a buy-to-let mortgage.
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Question
Is there an upper age limit for buy-to-let borrowers? I am 56 and would like to buy a property to rent out to provide an income in the short-term and then help fund my retirement in the long-term. I am investing a proportion of my savings for the deposit and I already own, outright, my own two-bedroom house. I would expect to be able to fund around 50% of the purchase myself. But the combination of my age and the fact I am new to being a landlord is putting me off. Would anyone lend me the money?
Answer
Age is no longer a barrier when it comes to property investment. If you are looking to borrow personally there a good handful of lenders which will stretch their age limit to 85 years at the end of the loan term. There are even a couple of lenders which go above this taking you past your 100th birthday! If you are looking to borrow via a limited company then there really is such a thing as no upper age limit! We have access to lenders which don’t impose any age limit for company directors. Do get in touch if you would like help sourcing finance. Don’t worry about being a first-time landlord either. These options are still available to you.
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Question
I am new to buy-to-let and have found a property which is above a shop. I have been told it’s difficult to get finance for these kinds of flats so I am unsure whether to go ahead and put in an offer. It’s a great three bedroom flat in an area with good rental potential. The shop below is a charity shop but there are a couple of takeaways nearby as well as a pub.
Answer
Not at all. The majority of buy to let lenders will consider flats over commercial property, it really comes down to the type of commercial unit below. A charity shop should not restrict your options. If, however, you were buying above a takeaway shop, restaurant or bar you would see the number of finance options decrease. If you would like an idea on rates and terms, please feel free to give us a call on 0345 345 6788.
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