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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
Climbing the buy-to-let ladder
I would value some advice, please, on extending my buy-to-let portfolio. I’ve been renting out a house with a buy-to-let mortgage for a year now and I’m happy with how it’s gone so far.
I would be keen, in a few years, to add another property to my portfolio. Do most landlords gain the capital for this by remortgaging their current property or do they use the rental income and put this into savings?
Answer
I am so glad your landlord journey is going well – congratulations! There is no correct answer as to how you would do this.
We frequently see landlords tap into the equity in their properties to raise funds for deposit, but it’s also common to use savings from the rent they have received or from other income.
I think the key message here is that raising money from the property you already have is a very normal way of doing this. Good luck!
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Question
Buy-to-let criteria: What boxes do I need to tick?
With so many people unable to get on the property ladder, I’ve heard the rental market is strong and I am therefore considering buying a property to rent out.
I will need a buy-to-let mortgage and would be keen to understand more about eligibility. I am 34 and own a residential house with my partner.
Do I need to have a certain amount of money to put down for a deposit and will I need a good credit score? Also do I need to have a certain amount of equity in my residential property and will my income be considered?
Answer
I think now is a great time to invest in buy-to-let – yields are increasing, and demand is high, so your void periods should brief.
To answer your questions: a good credit score is needed, but if there is a historic blip or two, this shouldn’t be a deal breaker.
The equity in your home is not really a factor, and neither is your income, bar some lenders requiring you to earn an arbitrary level of income to access a mortgage of any level with them – this is usually £25,000.
The harder-to-answer question is the amount of deposit. Buy-to-let mortgages are available up to 80% of the purchase price, BUT the lender will run an affordability calculation in the background, which is essentially making sure that the mortgage interest plus other costs of having the property can be met by the rental income.
This calculation varies depending on numerous factors, so your best bet here is to speak to a broker who can advise on the numbers.
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Question
Are buy-to-let mortgage rates being hit by the current price hikes?
I am due to remortgage my two rentals – a flat and terraced house – in May. I am hoping to lock into deals six months before my current mortgages expire so I can take advantage of lower rates before they grow higher.
What are buy-to-let mortgage interest rates like at the moment and are there many good deals around?
Answer
Great that you are forward planning. Currently, rates are pretty high; however, I think they will come down a bit over the next month or so.
So, my advice would be to hold off until January, when I think you will be able to secure something more competitive than you can right now.
Do speak to a broker who can look at options from the whole market, thus making sure you are getting the very best deal.
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Question
How do mortgage lenders view leaseholds?
I’m looking at purchasing my first buy-to-let and have seen a couple of flats which I am considering.
The only thing putting me off is the leasehold element. How do lenders view leaseholds? Would it be more straightforward as a landlord to purchase a freehold property?
Answer
Leaseholds are largely fine from a mortgage perspective as long as the term is at least 75 years and the ground rents are not excessive.
It may be worth getting a copy of the lease document and asking your solicitor to cast their eye over it upfront, just to check there is nothing contentious.
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