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buy to lets

MYTH BUSTING: Barriers that don’t really exist!

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You need to own your own home, or already have a BTL to get a BTL or HMO mortgage

Yes, it makes it easier, but no you don’t need one. And if you are tight on deposit funds you need to balance out the increased rate on your BTL mortgage against the money you’d need to spend on buying something you don’t really want and then having to find more money for your next deposit.

Limited company mortgages are more expensive. 

To a point this is true, but there isn’t really much in it once you own a few properties or if you don’t have any non-property income. What’s more important is your tax position, and long-term goals so it’s always worth speaking to your accountant to get advice for your circumstances. Once we know that, it’s my job to find the mortgage for you.

Bridging isn’t worth using, it’s too expensive. 

This is something I strongly disagree with!! Yes it adds the expense to the deal, but if the numbers work then it has so many advantages – it allows a quick purchase, you don’t need planning or it is in mortgageable condition and it allows you to realize any potential uplift in value quickly.

The lowest rate is always the “best option”.

When looking at your mortgages, I would always suggest thinking about where you want to be in 5 years and working back from that point. So releasing more equity, or releasing it quicker could help. As could using a lender who is more flexible in experience. There is so much more to it than just looking at the rate, so be careful with quick comparisons, and find out the whole story.

Holiday let’s: we can now use actual holiday let rental!

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Here we are at our Friday blog day again. I hope you’ve had a productive week!

As things start to open up we are starting to see more mortgage products appear in the market too. In the residential market this is most noticeable with the new 95% LTV products – a sign that confidence in is improving! And in the buy to let market we are seeing more options for holiday let’s. This year, with all the uncertainty around foreign travel, I think we will see an increase in demand for UK holidays. It will be interesting to see how that plays in the next few years – will we see more people falling in love with UK holidays and see their benefits?

This week I want to tell you about a new holiday let product we have available. For a while now we’ve not had great options for holiday let’s, but as things start to reopen and the chances of foreign holidays continue to look bleak lenders are spotting an opportunity.

Until now we have been able to lend up to 75% of the purchase price or current value  based on the 12 month AST rental figure. 

What this meant was the lender would only leverage it against a standard AST income, rather than the actual holiday figure, which may be higher.  Although you could use the property for holiday rental.

This can often work, but certain locations and property types don, and we’ve struggled with options for that until now.

A lender who used to be happy with holiday let’s (pre Covid) has now re-entered the market. There are some restrictions, the biggest being that the maximum loan to value is 70%; the rates, though, are lower in most scenarios to the options we previously had, so you may decide that 70% works.

The lender requires you to have a minimum income (between all applicants) and some previous experience. This can be with buy to let’s, it doesn’t mean you need to own a holiday let.

The big benefit is the income calculation. We are able to use 30 weeks income, at an average of the low, medium and high season rates. This can give a much higher maximum loan. 

Their minimum loan is £50,000, so covers all areas of England; the term can be from 2-30 years with interest only options available for the term. Rates start at 3.84% for a 2 year product at 70%.

As always, if you have any questions or scenarios you want to run through then please give us a call!

Enjoy your long weekend everyone.