We Are Buy To Let Specialists
Looking for a buy to let mortgage?
If you are looking to purchase a buy to let property, you have come to the right place. We have experienced advisors who are experts in this type of mortgage.
A Buy to Let (BTL) refers to the purchase of a property specifically to rent it out. In recent years it has become an attractive way to invest due to the high rental yields. There is no doubt there is uncertainty in the market at present, but it has seemingly not deterred landlords investing in new properties. Property continues to remain a resilient and stable investment despite the ongoing pandemic.
There are many considerations to be made when thinking about a buy to let such as costs involved, commercial risks and tax. It is important that you seek independent legal advice regarding the changes to your tax. It is also fundamental that you acknowledge the responsibility that comes with being a landlord. The National Landlords Association (NLA) will provide you with a good understanding of the various responsibilities that will fall on you as a landlord. It would be prudent to familiarise yourself with their list before proceeding.
Commercial mortgages and some let to buy mortgages are not regulated by the Financial Conduct Authority.
Your home may be repossessed if you don’t keep up repayments on your mortgage.
We Can Help With Any Kind Of Buy-To-Let
Limited Company BTL
There are pros and cons to both buying a BTL property personally or via your limited company. Essentially the main difference is due to tax. Lenders are increasingly seeing more investors buying through a limited company for the sole reason that you get more favourable tax treatment. As a result of the increasing demand lenders are improving their product ranges, but it can be more limited when compared to personal BTL range.
The limited company only exists for the purpose of holding a property, no other types of business can operate under this limited company. The company can be started online for £20 and can be used to purchase one or more property.
Once you start the limited company you are provided a Standard Industry Classification (SIC) code. This is a 5-digit code that groups companies by their business activities and is designed to give Companies House a quick and easy way of understanding the purpose of your business. There is no minimum operating time before you can use the company, this is because the lender will not focus on the company itself, but the directors, they will want to conduct their credit checks and income assessments. The downside to purchasing a property using a limited company is that lenders and solicitors tend to charge higher arrangement and legal fees due to the extra work that is required.
Holiday lets are becoming a popular alternative property investment. The benefit is that you can rent one out for more money than you could a normal rental property. Should the property be regularly let, you could generate a higher income. It is important to note that furnished properties are treated as a “business”, which means you can claim tax relief on mortgage interest. For the property to be deemed as a holiday let it must be let as furnished accommodation for at least 210 days a year. The benefit of this is that you can personally use the property for 22 weeks of the year.
There are several reasons why you may wish to remortgage your BTL property, this could be due to a more competitive rate elsewhere, paying off debt, buying out a joint owner or it could be that you need to raise equity to purchase another property.
Finance for portfolio expansion can be done in a variety of ways such as a full remortgage to another lender, a second charge loan or if you meet the requirements of ownership of four or more properties you could consider a portfolio mortgage, which would cover all properties with one loan. If you are considering increasing your borrowing for debt consolidation or home improvements to the rental, you could consider a further advance with the current lender.
The process to conduct a BTL remortgage to another lender is like that of a standard remortgage.
Let to Buy
A let to buy is when you rent out your existing residential property and buy a new home to live in. The process involves applying for two mortgages at the same time. To purchase the new property, you will need to convert your existing residential mortgage into a BTL, and then apply for a residential mortgage on the new property. There are various factors to consider when doing this, such as how you will manage becoming a landlord and how you will maintain the two mortgages.
If you have built up enough equity in your home, you may wish to use this money for the deposit on your new home. The lender will require you to confirm what the rental amount will be on your property; you will need to make sure your property can achieve this. The best way to do this is to speak to a local lettings agent to understand the rental market and demand in your area. In addition, you will need to consider how much Stamp Duty you will need to pay for both the BTL and the new residence.
If you own 4 or more buy to let mortgaged properties, even if they are owned by a combination of you and those within a limited company, you are considered a portfolio landlord.
Changes in legislation have reduced the amount of tax relief a landlord can claim, and landlords can no longer offset interest as an expense like they could have done in the past. Corporation tax will remain at 19% for annual profits in the current tax year, and for this reason many portfolio landlords are placing their properties in limited companies and looking at a single portfolio mortgage.
House in multiple occupation (HMO)
A house in multiple occupation is a residential property where common areas exist and are shared by more than one household, for example the property is let to three people from three separate households, but they share the kitchen, bathroom and living facilities. Often these types of residences are referred to as house shares. They are considered more profitable than standard rentals because there are multiple tenancies involved. For the property to be defined as an HMO it must be rented to at least three people who are not from one household. Whilst higher yields are usually more attractive to landlords, HMOs can be more complex and challenging to run and for this reason they tend to require BTL experience to be successful.
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