Understanding whether you are likely to be able to get a buy to let mortgage in the UK.
Getting a buy to let mortgage for a UK property investment can seem daunting but should in most cases be a relatively simple process. In almost all cases the answer to 'Can I get a buy-to-let mortgage' is yes, however in some cases if you are a higher risk client the interest rate is so high it makes little to no sense to take one.
Naturally investors like to use a mortgage even if they can buy the property outright. In simple terms £100k cash can either buy one small investment property, or up to 4 properties with a mortgage. Having 4 working for you at the same time gives 4 times more capital growth, spread risk rental and a real potential to grow your portfolio quickly.
What are the major factors for a UK buy to let mortgage?
The main factors Baron & Cabot and our specialist international mortgage brokers will look for are the property itself, if for instance it has a commercial space in it this can cause issues, or if it is too tall. Also looking at you, are you an experienced investor, do you have enough disposable income to support another property and how much deposit will you put down.
Equally if you are a foreign investor it is often the case that you need to be borrowing higher amounts for your buy-to-let investment. Some countries will lend on properties with a minimum value of £130,000 for example. Others lower.
Even if you are in the UK remember that the mortgage provider is also a business, the less you borrow the more interest they want to add to make a profit off the borrowing. This will often mean that higher risk properties like a studio have interest rates significantly higher than a 1 or 2 bed, and may make a studio end up costing the same amount as a 1 bed over the term of the mortgage.
Speak to your advisor.
If you are not sure speak to your Baron & Cabot advisor. Most clients use a mortgage and basic information will be shared by your property broker, with more advanced information being passed to you by the specialist mortgage broker for your country.
Basic tell tale issues for high mortgage rate
The basic reasons why your mortgage may be rejected or interest rate too high are:
The Property
- Commercial space in the block (specifically cafe's, restaurants, fire risks),
- Property too tall (too many floors),
- The lender is over exposed in the development (generally over 30% already mortgaged by that provider),
- No owner occupier units (mortgage companies like to see a proportion of owner occupiers in a development),
- Strange building materials,
- Flood risk,
- High ground rent.
You
- Salary,
- Affordable expenditure (can you afford to pay the mortgage if there is a rental void period),
- Location (off shore sometimes costs more),
- Age.
As with any investment question speaking to your broker is a quick way to get the information required so you can be happy to work to the next stage of reserving a house or apartment to start your rental income. Baron & Cabot have internal advisors, and have partnered with some of the best UK and international mortgage and tax advise companies to ensure all clients receive world class service.
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