Invest with a Top Buy to Let Mortgage Broker

This depends on your personal circumstances, but there is a range of factors to consider when entering the buy-to-let market. This also depends on what type of investment you are looking to make, and what you are looking to achieve from your investment. Let’s look at some advantages and disadvantages:

The obvious advantages of buy-to-let include the fact that you can earn rental income from properties. In some locations towards the north, your rental yield can reach up to 8%. Additionally, you could experience capital growth as both your investment and the property value increase. Finally, there is a range of insurance options available to protect you against loss of rental income when a property is vacant, and from damage and legal costs.

On the other hand, you’ll likely have a significantly higher tax bill, and have to allow for insurance, natural wear and tear, and stamp duty into your expenses. Furthermore, if you don’t have the correct insurance, then vacant spells and damage to your property won’t be covered. Another thing to consider is that if the value of the property falls, your capital will also decrease. With an interest-only BTL mortgage, you’ll have to make up the difference if the property is sold for less than what you bought it for.

Remember that being a landlord is a big responsibility too! You’ll also have to keep your knowledge up to date on laws, regulations, and your obligations to your tenants.

Not all buy-to-let mortgages are interest only, though many are, and many landlords will opt for an interest-only BTL mortgage. This is because this mortgage format allows them to pay only interest on the mortgage each month – making monthly payments lower, and increasing rental profits. The balance owed, or ‘principle’ remains constant throughout the term and must be paid off in full at its conclusion.

By taking advantage of the greater surplus from monthly rental income interest-only mortgages tend to allow, landlords can improve profit margins and can put aside more for unexpected property costs, invest in improvements, or save more to invest in new property.

The answer to this is highly variable. It largely depends on the lender(s) that you are seeking buy-to-let mortgages from – with some lenders limiting the number of buy-to-let mortgages you have with them, and others limiting the number of buy-to-let mortgages you have at any one time with other lenders.

Some lenders have what is termed an ‘exposure limit’ capping the number of buy-to-let mortgages you may have with them at any given time (for example, to four or five), or can limit the total value of your buy-to-let mortgages collectively to a set figure (£5 million, for example), or a combination of both.

Whilst landlords are generally entitled to £1000 of tax-free income per year, the vast majority of rental income is taxable, and must be declared as part of your self-assessment tax return, whilst those earning specifically between £1000 and £2500 must contact HMRC. Upon filing, income tax for landlords earning above the £1000 threshold will be charged in accordance with income tax banding if applicable. This banding is as follows; 

Basic rate – 20%

Higher rate – 40%

Additional rate – 45%

We always recommend speaking to a qualified accountant for advice specific to your situation.

Buy-to-let mortgage lenders generally require a higher deposit than that seen in typical residential agreements. Though this usually sits at around 20 to 30% of the property’s value, it’s not uncommon for buy-to-let lenders to require a deposit of up to 40%. These large deposits provide assurance to the lender in the instance of tenant rental default or periods of vacancy.  

If you find these high deposit rates daunting, you may wish to seek assistance from a reputable mortgage broker, like Fees Free Mortgages. As a result of our extensive industry knowledge and network, we’re able to source the most secure, suitable, and cheapest deals for our clients.

Buy-to-let mortgages are generally available on both an interest-only, and capital repayment basis. 

Interest-only mortgages, a common choice amongst investors, particularly in the buy-to-let market, allows property owners to pay only the outstanding interest on their loan, meaning the borrowed balance is not due until the end of the specified period or term. This method significantly reduced monthly outgoings for landlords and generally allows for the maximisation of rental profits.

Capital repayment, on the other hand, requires the borrower to repay both capital and interest. Since there are marked pros and cons to each of these repayment options within the context of buy to let properties – it’s highly advisable to discuss these with a mortgage broker experienced in the BTL sector.

Buy-to-let (BTL)  is a common process by which landlords or investors purchase a property with the sole intent of letting it for a profit. Though buy-to-let properties are primarily placed within the residential sector, the term also covers investment properties such as student accommodation. Those investing in buy-to-let properties effectively become landlords. Though investors may purchase buy-to-let properties with cash, a common method for securing an investment flat, home, or commercial property is through a buy-to-let mortgage. 

When reviewing a buy-to-let mortgage application, lenders will take into account traditional factors such as income and expenditure, whilst noting the potential rental price of the property.

The phrase buying ‘off-plan’ refers to the process of purchasing a property based entirely, or near entirely on specifications, prior to building completion. This complicates the mortgage application and approval process slightly, because delays, setbacks, and the building process as a whole may lead to the need for extensions, renewed offers, and re-evaluation. This lengthy process often results in repeat fees – something we don’t believe in. 

The team at Fees Free Mortgages are highly experienced in finding the best possible mortgages for off-plan purchases and know the application and re-evaluation processes inside-out. If you’re looking to buy off-plan for your buy-to-let property, contact one of our friendly advisors today – we’ll be happy to help you.

Yes. In short, you’ll need to pay Stamp Duty Land Tax on a Buy To Let property if it’s your second property and not your main residence. The amount you’ll have to pay depends on the purchase price. See details below:

Less than £125,000 – 3%

£125,001 – £250,000 – 5%

£250,001 – £925,000 – 8%

£925,001 – £1.5 million – 13%

£1.5 million and above – 15%

Information correct as of April 2017 – Source:www.gov.uk/stamp-duty-land-tax/residential-property-rates