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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
We are just in the ‘ideas’ stage at the moment, but my partner and I are considering purchasing a property in France to rent out to holidaymakers. We might use it once or twice a year ourselves for holidays. Would a buy-to-let mortgage be appropriate for this kind of purchase and if so, would we be able to get the loan in the UK or would we need to use a French broker or lender?
Answer
I’m afraid we can’t help you because we work with lenders offering buy-to-let mortgages only on UK property. I suggest you find a broker that specialises in overseas property finance. Good luck.
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Question
This might seem like a very stupid question, but I am new to buy-to-let and very confused about how it works. I own a property in the South East, near London. I am worried about my pension being insufficient, so was looking into buying a house in the North of England, where property prices are much lower, to rent to tenants. I have a deposit of £12,000 – this would probably amount to slightly more than a 10% deposit. Are there BTL mortgages which will lend me 90% of the value?
Answer
No. The most you can borrow is 85% loan to value (LTV) although the range of products available in this bracket is extremely limited. The standard maximum is 75% LTV, although 80% LTV achievable through some lenders. Bear in mind, the higher the LTV, the higher the mortgage rate.
If you are confused, I suggest you do lots and lots and lots of research first. Get professional financial advice about your personal circumstances because investing in buy-to-let will affect your tax position. Also, talk to other landlords about their experiences of getting into buy to let. Join a landlord association and get some training too, both the RLA and the NLA offer a variety of courses. You need to make sure you go into buy to let with your eyes wide open! When you have done all of this, if you still want to get into buy-to-let, that would be the time to talk to a specialist buy to let broker.
Good luck! And of course, I am more than happy to help you further down the line.
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Question
I am writing to find out whether we need a buy-to-let or residential mortgage? I am married with two children and we have decided to move from London to Wales to be closer to my family. My husband, however, cannot relocate with us for at least another year and will need to remain in London. We have decided to buy a small flat in the outskirts of greater London for him to live in during the week. When he’s ready to move (in a year or so) we will let the property to tenants. Would we be eligible for a buy-to-let or should we get a short term residential mortgage and switch to a buy-to-let when we renew further down the line?
Answer
You can’t get a buy to let mortgage and live in a property yourself, so first off you will need residential mortgages on both the flat and the new home in Wales. If the flat is big enough, you could get a lodger to share the property with your husband and help pay the bills – this is acceptable on a residential mortgage.
When your husband no longer needs to live in the flat, you could ask the lender to give you consent to let, while you consider your longer-term options. Depending on the lender this is likely to be granted for 6-12 months.
Thereafter, you would need to refinance onto a buy-to-let mortgage. When looking for a flat, I suggest you consider whether it will make a good rental property when your husband moves out – this will increase your chances of getting a buy to let mortgage. Do get in touch if you would like help with finding any of these mortgages. We can help with both residential and buy to let finance.
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Question
I would like to remortgage on my buy-to-let property in the next few months as my current five-year fixed-rate deal is due to expire. Now the new rules around mortgage interest tax relief are being phased in, I wondered whether this additional outgoing might affect my application and the sort of rate I can obtain. I am a higher rate tax payer and this is my only buy-to-let property. Will the tax change impact a remortgage?
Answer
Almost certainly, although refinancing with your current lender on a product transfer deal may be an option. However, for the most part, the tax changes and new underwriting guidelines issued by the Prudential Regulation Authority mean that you may not be able to borrow as much as before.
Interest Cover Ratios and stress testing for landlords borrowing personally are now more onerous. These days, lenders are likely to apply a rent to interest calculation of 145% at 5.5%, whereas previously you could have expected 125% at around 5%. There is a bit of wiggle room at the edges but your best bet is to get in touch so that we can look at your specific circumstances and find the best solution for you.
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