Ask the Expert: Is it a good time to invest in buy-to-let?

Can we have a buy-to-let mortgage if we owe money?

Question

My husband and I are coming for retirement in a couple of years, and we are considering purchasing a home to rent out and top up our income. However, we are still paying off the mortgage on our home. Will be allowed to take out another mortgage?

Answer

So, the very short answer is yes. Lenders (within reason) are very comfortable with your having borrowing/loans beyond that which you want to raise on a buy-to-let.

The rationale is that the buy-to-let mortgage should be paid for by the rent you receive, and thus be self-funding and sit outside of your other financial commitments.

Do get in touch with our brokers to see what types of rates you could access!

Joint mortgage with a friend – protecting my share

Question

I run a building business and I’m thinking of investing some of the profits into a buy-to-let property, see how it goes and then possibly expand. I’ll need a mortgage to help me fund the first property.

A friend of mine is keen to invest in the first property with me. I think it’s a good idea as I’d like to spread the risk a bit and it’ll keep costs down.

But can friends take out a joint mortgage application and what do we need to do to ensure our interests are protected. Do we need separate brokers, legal advice etc?

Answer

What a great idea! There is nothing to stop two people, regardless of your relationship, from investing in property and raising a mortgage together, so in principle, you are good to go.

You are right, however, to proceed with caution. I would suggest you speak to a solicitor who can put an agreement in place to ensure you are both protected, and things are kept fair. Best of luck!

Is it a good time to invest in buy-to-let?

Question

I’d planned to purchase a property this year to let out to tenants but I’m reluctant to take the leap as mortgage rates are high and it seems landlords are selling up.

What’s the general outlook for the year and is it worth biding my time to see what 2024 holds?

Answer

I personally think it’s a great time to invest, but I also don’t think you need to rush.

House prices are looking to have bottomed out in most regions, and we don’t expect a return to growth until the end of the year. Similarly, mortgage rates have been easing and will probably come down a little further over the next couple of months before levelling out for the remainder of 2023.

Lastly, experts predict rents to increase by 5% this year. So, I think you should keep your eyes peeled for a great investment and not be afraid to commit if you find something, but likewise, you’re in a great position where you don’t need to rush into anything either. Good luck!

Can I get a buy-to-let mortgage on an auction property?

Question

How easy is it to get mortgage on an auction property? I am aware I would probably need to arrange it in advance, but would this prove troublesome without exact numbers etc?

I plan to purchase a property which I will renovate and rent out so it will be for business purposes only.

Answer

It will really depend on the condition of the property. Buy-to-let mortgages are arranged on the premise that the property is lettable from the day the mortgage completes. As such, if the property requires refurbishment works before you can let it out, you would need to look at bridging finance instead – this is a great solution in this situation.

On the other hand, if the property is in a lettable condition at the time of purchase, sourcing a buy-to-let mortgage should not be a problem. You will, however, need to be mindful of the completion deadline associated with the purchase.

Typical auction timings can take 28 days, and whilst many lenders can work to this timeframe, not all can, so you will need to dig into this.

It may be worth speaking to an expert broker who can point you in the right direction to help you find the right lender.

Meet our expert…

Jeni Browne, sales director at Mortgages for Business

Jeni is a highly qualified mortgage adviser, specialising in property finance solutions for investors and landlords. She has nearly 20 years of industry experience and has a real knack for helping clients finance successful property portfolios.

She is particularly well-known for her effortless ability to explain complicated, jargon-filled concepts in plain English.

Jeni has worked for Mortgages for Business for the last 10 years and currently heads up the sales department. In addition to overseeing a large team of mortgage brokers, she is a landlord in her own right.

Jeni is the perfect person to answer your questions on buy-to-let mortgages and how to finance residential investment property.

Email kate.saines@emap.com to ask Jeni a question