Everything Buy To Let
A “Buy to Let” mortgage is usually sought when the property in question (or part of it) is “Let” to tenants. Most Landlords make a conscious decision to purchase a property with a view to renting the property and making a regular profit for which they will be taxed on that profit.
In most instances, the main purpose of owning one or more additional residential properties is to be overall profitable whether that is in the form of regular income or long term capital appreciation or maybe both.
A “Buy to Let” mortgage is a slightly different animal than the standard residential mortgages available. Firstly, the minimum deposit level is higher. This means that the deposit you have to put down on a Buy to Let property will be more than the deposit needed when buying a property for yourself to live in.
Interest rates will be higher too and this reflects the fact that the risk to the lender is higher.
Buy to Let Purchase – This is where you buy a property with the intention of letting the property to tenants.
Buy to Let Remortgage – A BTL Remortgage is sought when the landlord already owns the property! The Landlords objective is to move away from the current lender and find a new lender which can meet set objectives. Objectives could be a better interest rate or capital raising.
Portfolio Landlords – This can apply to mortgages used for both purchase and remortgage purposes. This is when a landlord has multiple properties and the portfolio needs to be kept balanced. The landlord may need to make changes to the mortgages on property within the portfolio for capital raising purposes as well as for tax efficiency. This can include a transfer of equity.
HMO’s – Homes of Multiple Occupancy have become popular due to the demand for more affordable accommodation. A good example (but not always) is student accommodation. Unlike purpose built flats, HMO’s are residential properties where common areas exist. HMO’s are usually subdivided houses.
Expat Buy to Let – This is where an Expatriate living abroad is looking to purchase with the aid of a mortgage or remortgage a property which is let to tenants. Not every lender will entertain applications from Expats and in particular, the circumstances of the Expat can influence whether the mortgage lender will, in fact, provide a mortgage facility.
Limited Company Buy to Let – As the name suggests, this is where a landlord takes out a mortgage through a Limited Company. There are various advantages for doing this and separate taxation advice should be taken as well as mortgage advice.
Offshore Company Buy to Let – This is a similar arrangement to the Limited Company Buy to Let mortgage but it is where the Limited Company operates from outside of the UK for taxation purposes.
Holiday and Short Term Buy to Let Mortgages – Not all lenders will accept applications when the landlord intends to let the property short term. Changes to taxation rules mean landlords will pay higher income tax on standard buy to let properties. This has fuelled the shift for many landlords to consider the short term let module.
Buy to let Mortgages are classified differently as follows:
- Regulated / Unregulated
- Standard (Business) Buy to Let
- Consumer Buy to Let