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Buy to Let Mortgages for Self-Employed
What are the features of a Buy to Let mortgage?
Self-Employed mortgages that are buy to let differ slightly from residential mortgages and they are aimed at people who want to invest in property. Generally, you will need to own your residential property that you live in and there are minimum income requirements, usually that you must be earning at least £25,000 annually.
The good news is there are lenders who will accept you onto a mortgage if you do not earn up to this amount, but they will want to know you can afford the repayments on your intended letting property.
The way in which your mortgage amount is decided upon how much rental income you expect to bring in from the property in question. It is also decided upon the standard affordability checks too.
What things should you consider when buying to let if you are Self-Employed?
You need to consider if your income is regular enough to be able to afford a Buy to Let mortgage. There will be times where you will not be able to rely on the tenants for rental income for instance they could fall behind or the property could be vacant. You will still be responsible for the repayments on the mortgage, and they will not stop.
You need to understand the commitments involved in investing in property. For example, the upkeep and the potential damages you may need to repair caused by tenants. You need to think about the location that you are investing in and ensure that there is a rental property market there. You will need to take out landlord insurance to cover yourself taking on your new investment.
Buy to Let as an individual or as a company?
Many people who are investing in property are opting to approach Buy to Lets as Limited companies. A big reason for this is because the law has changed around rental income being deductible as an individual investor.
It is much more tax efficient to invest through Limited companies, yet it would be worth speaking to a mortgage broker to further discuss your options.
What is top slicing?
There is a method used by particular lenders called top slicing in which lenders will allow the borrower’s personal income to top up any rental value that isn’t there to allow them the mortgage loan amount that they seek.
It is a good option if you have other means of income as lenders will examine them and then could decide to include them into the amount they assess for your mortgage loan. You need to ensure anything you want to be included has been declared as incomings.
It would be worth speaking to an accountant if you have a lot of different sources of income or any retained profits. This is because there are tax implications involved in every form of income and it would be worth ensuring they are in order before approaching a lender.
How will my income be assessed if I am Self-Employed investing in Buy to Let properties?
You will need to ensure that you can provide at least two years’ worth of accounts to your lender. This is so the lender can see how regular your income is and what type of work it is that you do. Lenders will look at your SA302 tax calculations and assess your tax overviews. Your income tax rate will also be assessed as well as the rental income estimate of the property in question.
What are the tax implications involved?
Buy to Let mortgages will focus more upon your income as opposed to whether you are a high rate taxpayer or not. If you happen to be self-employed and on day rate, then you could even access more in comparison to a high rate taxpayer.
It is better to seek out a fixed deal if you can as then you can usually borrow more as it will be over a longer period of time. It would be worth speaking to a mortgage adviser to discuss the tax implication around buy to let mortgages in more detail.
How can a Mint Mortgages and Protection broker help you?
Here at Mint MP, we provide our clients with a comprehensive, tailored service to suit your individual needs. We aim to take away the hassle from application to completion. We will listen to your circumstances and then recommend lenders to suit your needs.
There are some Buy to Let mortgage lenders who are not authorised and regulated by the financial conduct authority, but we are which means we can guide you through to the right lender for you. When it comes to Self-Employed applicants it is usually worth seeking out the specialist lenders.
Here at Mint Mortgages and Protection, we have access to the independent mortgage market meaning we can access mortgage deals that are not available on the high street. Get in touch with a Mortgage Broker today to start your journey to being accepted onto a Self-Employed Buy to Let mortgage.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
The Financial Conduct Authority does not regulate most Buy to Let Mortgages