The buy to let market has changed considerably in recent years with more changes on the horizon. If you are thinking about buying a property to let, there are a number of things that need to be considered. CMME can advise you on the best buy to let mortgages and help with the mortgage process once you are ready to move forward.
Becoming a Buy-to-Let landlord in 10 easy steps:
- Secure an agreement in principle – a dedicated adviser will assess your needs and arrange an agreement in principle that you can use when negotiating and offering on a property.
- Find your perfect investment property – this can be both exciting and daunting, knowing how much you can borrow can help narrow your search.
- Make an offer – once you have found your property you can now start to negotiate a purchase price. The maximum size of your buy to let mortgage is calculated using the rental yield of the property, which needs to be 125% of the annual mortgage repayments.
- Contact your adviser to start the mortgage application – once you have agreed a purchase price for the property, you should call or email your adviser and we can kick start the mortgage application. At this stage, your adviser will introduce you to your dedicated mortgage processor who will ensure that your application runs smoothly.
- Your mortgage application “goes live” – in order to process your application you will need to provide various forms of identification. At this stage you will need to instruct a solicitor and your adviser will be able to make recommendations from an approved list, all on a no successful sale, no legal fees basis.
- Searches and building surveys are carried out on the property – various checks such as area searches and land surveys are carried out to protect you and the lender.
- Your mortgage offer will be produced – Once all the lenders searches and surveys have been completed, we will push your lender to issue a formal mortgage offer.
- Your solicitor will request your deposit money and exchange contracts.
- You will agree a completion date – a completion date is agreed with your solicitor and then negotiated with the seller.
- Congratulations, you are now the proud owner of a buy to let property!
Recent Stamp Duty Changes
- Stamp Duty
From April 2016 buy to let landlords will need to pay 3% extra on top of every stamp duty band when buying an additional property.
- Mortgage Interest Relief
The current mortgage interest relief perk is soon to be removed. Currently landlords can claim for interest on buy to let mortgage payments. This essentially allows individuals to offset the interest against the rental income, leaving them to pay only their marginal rate on the profit.
2017 will see the maximum tax relief limited to 20%.
Despite the changes there are still a number of benefits to building up a property portfolio.
Whatever happens to the mortgage market, there will always be a demand for renting. The number of tenants continues to increase year on year. This is due to a number of reasons from rising house prices to the flexibility that renting offers.
- Record low rates
Mortgage rates for both residential and buy to let are still at record lows, and the Bank of England base rate is showing no signs of moving. In addition, landlords can benefit from the increase of competitive deals available in the market.
There is also the option of using your limited company to obtain an additional property. However, there are upsides and downsides to holding your buy to let portfolio in a company structure. For more information have a read through our guide.
For more information about a buy to let mortgage and to find out what is available to you, please contact us on 01489 555 080 to speak to a specialist mortgage consultant.