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Can I Get a Buy to Let as a First Time Buyer?
You absolutely can, although you’ll need to approach the right type of lender, as not all of them will consider inexperienced landlords. Those lenders who will offer this type of mortgage to a first-time landlord will want to put extra precautions in place to mitigate some of the risks involved in lending, so criteria may be stricter than it is for experienced landlords.
Can I change my residential mortgage to a Buy to Let?
Yes, it’s possible to Remortgage your residential mortgage onto a Buy to Let mortgage, assuming that you are going to be moving out and will only use it as a rental property. Not all lenders offer this option, but if your existing lender is unable to support the change, then you can look at other options.
You should bear in mind that there may be fees to get out of your residential mortgage, especially if you’re still within a Fixed-rate period. Most lenders offering this option will also expect you to have lived at the property for at least six to twelve months before you’re able to make this change.
Can I get a Buy to Let mortgage and live in the property myself?
No, you can’t, as whilst it’s not strictly illegal, it will be in violation of residential mortgage terms. If the lender discovers that you’re living in the property, they may enforce the full repayment of the loan as a result of this breach.
What criteria will I need for a first-time landlord Buy to Let mortgage?
The criteria will essentially consist of the same components as any other Buy to Let mortgage, but are likely to be stricter for First Time buyers. As with any mortgage, criteria vary from one lender to the next, but may include:
- Home ownership – whilst they may be willing to consider the fact that you don’t own any investment properties and have no prior landlord experience, many lenders will insist that you own a residential property. There are lenders that will accept entirely first time property owners, but your choice is likely to be limited in these circumstances, and you will absolutely need to speak to a specialist broker.
- Affordability/Income – There is not always a minimum income requirement for Buy to Let mortgages as the loan will be based on the rental income potential of the property you are buying, rather than your individual affordability. That said, as a first time landlord, it is more likely that lenders will want to you have a reliable personal income and require evidence of this
- Age – typically you can get a Buy to Let mortgage at the age of 18, although some lenders will only lend to over 21s. There is also an upper age that most lenders will accept applications form, however, some specialist lenders have no upper age limit
- Credit rating – There are bad credit lenders available in this niche, but this will depend on your specific circumstances. Lenders offer the highest LTV (Loan to Value and lowest interest rates to those with a strong credit file, however.
- Repayment vehicle – If you use an Interest-only Buy to Let mortgage you’ll need a suitable repayment vehicle to repay the loa at the end of the mortgage term. This is often the sale of the investment property itself, but your lender may be willing to look at other options based on your preference and circumstances
How much deposit do I need on a first Buy to Let and how much can I borrow?
The maximum LTV on a Buy to Let mortgage is typically 75%, so you will need at least 25% deposit in the majority of cases. There are some lenders willing to accept less deposit than that, however, this is more likely to be offered to experienced landlords.
The amount that you can borrow is not assessed on how much you earn, so the amount that you can borrow will depend on the value of the property you are looking to purchase. Most lenders will expect that the property is able to achieve a rental yield (income) of 125-145%, however.
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What documents will I need to apply?
This will vary from one lender to the next, and depending on your circumstances, however, the typical documents you may need to provide are:
- Proof of income – payslips or your tax calculations, depending on whether you’re employed or Self-Employed, respectively
- A valuation of the rental value of the property that has been endorsed by an ARLA (Association of Residential Lettings Agents) registered professional
- If you are not a homeowner, a reference from your landlord may be required
Should I get an Interest-Only or Repayment mortgage?
It can be more difficult to find a Repayment mortgage as Buy to Let properties tend to be purchased with predominantly Interest-Only products, however, there are lenders that offer this option. Your broker will be able to advise you about the most suitable option for you, as it will depend on your individual circumstances.
What if I have Bad Credit?
It’s possible to get a Buy to Let mortgage with less favourable mortgage rates, and potentially lower levels of borrowing, however, this will depend on the level of bad credit you have. The more severe the credit issue, the greater the reduction in the pool of lenders available to you. Each lender has different criteria relating to the type of bad credit that’s acceptable, so your broker will recommend one that suits your need.
Do you have to pay Stamp Duty as a first-time landlord?
This will depend on your position as a buyer and the value of the BTL property. As follows:
If you own a residential property – This will be classed as a second home, so you will incur a 3% surcharge on the cost of standard stamp duty, which is tiered based on the price bracket the property falls into
If you are a total First Time Buyer – You won’t have to pay the 3% surcharge, but if your first property is an investment property rather than a residential home, you will forfeit the tax relief offered to First Time Buyers.
What other costs are involved?
You will also need to consider the cost of any renovations required, property management agent fees, and the other costs that apply to mortgages arrangement in general, such as:
- Arrangement fee (which doesn’t apply to every mortgage, but depends on the lender)
- Solicitor fees – for searches and conveyancing services
- Deposit
- Landlord insurance is not always essential but highly recommended
Who offers Buy to Let mortgages for first time landlords?
A selection of high street and specialist lenders are available in this niche, so there are plenty of options available. It can be more difficult to find a lender with criteria you’re able to meet as a first time landlord, however, unless you seek the right advice.
How can a Mortgage Broker help?
Here at Mint Mortgages & Protection, we specialise in property investment, so we can find the most appropriate Buy to Let mortgage for you regardless of your circumstances. We work with lenders in this niche daily and know which are likely to consider applications from inexperienced landlords.
This saves you time and frustration, not to mention damage to your credit record that can occur if you apply for a Buy to Let mortgage with the wrong lender for your needs.
Most Buy-to-Let Mortgages are not regulated by the Financial Conduct Authority
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