First Time Buy to Let Landlords

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If you’re thinking of becoming a landlord for the first time, you’ll need a full picture of the risks versus benefits involved. It’s also important to understand what type of mortgage products you’ll need and where to go for the best mortgage advice. 

Should I Become a Landlord?

Before deciding to become a first time landlord, you should consider the following:

Risks:

A buy to let mortgage is a long term commitment. Should you want to sell the property, a dip in the market or long term tenants could disrupt your plans.

Whilst the property is vacant, you’ll still have mortgage payments to make.

There are additional costs to consider, such as legal requirements to fulfill before letting out the rental property and renovation costs.

Property management will take up a lot of your time, if you choose to do it yourself

Any income from your buy to let property will be subject to a number of tax liabilities.

Benefits:

With the right property and mortgage deal, you should make a significant rental income.

There’s a degree of stability in the regular monthly income, whilst the property is occupied.

Although you’re liable for additional taxes, there are also some areas of tax relief on your related outgoings.

Can I Get a BTL Mortgage?

If you’re considering a buy to let mortgage for the first time, there are certain requirements above and beyond those of a standard residential mortgage. 

The vast majority of applicants will need to be a homeowner in order to apply. This doesn’t need to be outright, but you’ll have to prove you have a current, well managed mortgage. It’s possible, but quite rare for first time buyers to take on a BTL mortgage as their first.

Individual lenders will have their own specific criteria for acceptance, however, most will require a large deposit (usually between 25 and 40%) and a minimum income of around £25k. There’s also often quite a low upper age limit.

How Much Can I Borrow for a BTL Mortgage?

The calculation criteria is similar to that of a standard mortgage, in that the affordability is based on your income. For a BTL mortgage, however, lenders will also consider future rental yield. 

The most important thing to remember is that you will need at least 25% deposit, so the LTV (loan to value) amount can be a maximum of 75% of the property price.

Can I convert a Residential Mortgage?

This is sometimes possible by obtaining a consent to let from your mortgage provider. Not all lenders will consider this, however, and it must be in place before you accept tenants.

How to increase your chances of acceptance

As with any mortgage, having a good deposit, enough income and a strong credit score will increase your chances of acceptance for a BTL mortgage. Choosing a rental property with potential for high yield income will also put you in good stead.

How can a Mortgage Broker help with a BTL Mortgage Application? 

An authorised and regulated mortgage broker is able to help you to find the best mortgage offer for your individual circumstances. There are also brokers who specialise in both BTL mortgages and first time buyers. This will give you confidence that you are obtaining the best mortgage rate available to you.

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First Time Buy to Let Landlords

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