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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
The best rates and how to access them
I am about to purchase a buy-to-let with my sister. We are wondering if you could advise us on how to find the best rates and what kind of figure a ‘good rate’ is in the buy-to-let world these days.
We are looking at purchasing a £200,000 house in the north of England with a 40% deposit – thank to in inheritance. Thanks for your help.
Answer
Many factors can impact which mortgage rates you can access and, therefore, your options’ competitiveness.
Having a healthy 40% deposit should certainly help you, but generally, the lowest rates are available to those who already own their own home, have a clean credit profile and earn more than £25,000 per year.
Even if you don’t tick all these boxes, you should still be able to get some great pricing! I’d recommend you speak to a broker who will be able to run through all of your options with you in more detail.
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Question
Renovating to ‘go green’ – what happens to the mortgage?
I have noticed there are a number of benefits to landlords who are willing to make their properties for energy efficient. I have recently come into some money and have decided to use the cash to improve my rental property. My tenant has reached the end of their contract so it’s great time to do this.
I am getting builders to start work in the summer and they will be installing the necessary improvements. But what do I do about the mortgage? Should I remortgage to take into account the fact the property is empty, is there a bridging deal I can use? Or are there lenders who can offer me a green mortgage while the work is taking place?
Answer
There’s no need for you to remortgage whilst the improvements are taking place; it’s quite acceptable to have a short vacant period (providing you can still afford the mortgage repayments) whilst you do some work.
Green mortgages are there to support and reward landlords who’ve made improvements to an existing property like you are or who are purchasing a ‘green’ property.
It may be that when you come to remortgage, you can access a better rate based on your hopefully improved EPC rating! Rest assured, you’re under no obligation to remortgage until the time is right.
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Question
Interest-only or repayment? What’s normal?
I have been getting some advice from a friend who has three buy-to-lets because I am quite keen to get into the market myself this year. She tells me all her mortgages are interest-only deals and I am quite surprised. My friend tells me this is quite normal for buy-to-let. I am a little reluctant to go down this route as I would like to build up some equity. Can you advise?
Answer
Your friend is correct, it’s very normal for landlords to take interest-only mortgages on buy-to-let property. There are several reasons for this, but usually, it’s down to keeping committed expenditure to a minimum.
This allows you to save surplus rent for a deposit on future purchases or make a lump-sum payment when the time is right.
Capital and interest structures are still available for buy-to-let mortgages, should you prefer this option! I would speak to an experienced mortgage broker who can run through this in more detail and help you work out what’s best for you.
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Question
What changes can I make to our property without consulting my lender?
I have been renting out my home via a buy-to-let mortgage to a regular tenant for over two years. My wife and I used to live in the property but we moved abroad and we are renting to a lovely family who are settled and happy to continue renting for the foreseeable. It’s a great arrangement all round.
This week the tenant emailed me to say they were expecting a baby and wanted to turn one of the double bedrooms into two rooms. They said they would organise and pay for the building work themselves.
My wife and I are in two minds – one of our concerns, is whether it would impact our mortgage. It would be really helpful if you could advise us on what changes we can make to our property without consulting our lender, please. Obviously, if this will change our rate or terms we would have to take this into account when making our decision.
Answer
Good on you for being flexible for your tenants! I would first check the T&Cs of your mortgage, but I would be surprised if it did preclude changes of this nature as it sounds like a relatively minor piece of work requiring nothing more than Buildings Regulation sign off. I’d speak with your lender directly to be sure, but I can’t imagine it would be an issue.
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