Buy to Let Mortgage Update

We have come through a turbulent period in the Buy to Let market with many of the big players having previously disappeared altogether & lending criteria being significantly restricted. However new entrants are starting to launch to market and loan to values are now being pushed to 80% (subject to high credit score) and there are more choice of lenders willing to proceed with 25% deposit at more competitive rates. Mosaic Mortgages are specialists in arranging and advising on buy to let mortgage funding and can help ensure that you have the most suitable product for your particular requirements.

In this update we have briefly detailed some of the key changes and potential pitfalls where we will be able to assist in your buy to let purchase or remortgage:

• Lenders are being more cautious than they have historically and it is not unusual for lenders currently to request proof of income & specify minimum income of at least £25k to qualify for a buy to let mortgage. However, there are some lenders with no minimum income requirements so contact us for an illustration specific to your requirements.
• Rental income coverage had previously been relaxed & at the height of the buy to let boom, some lenders were only looking for 100% interest coverage or in some cases none whatsoever. Now, the rental cover will typically be 125% of the pay rate or a reference rate set by the lender so a good investment yield is essential. We will be happy to calculate maximum advance available on the rental income achievable.
• First time buyers will find it difficult to obtain a buy to let mortgage but first time landlords should be ok as long as they are existing homeowners.
• The type of property & proposed tenant is another important consideration as there are few lenders that will allow multi letting to students, HMO’s (Houses in Multiple Occupation) or multiple flats on one title but again, Mosaic Mortgages has access to specialist lenders and can provide advice as to how best to finance any proposed project.
• Typically, buy to let mortgages will only be offered to applicants with an A1 credit rating and anyone that has any bad credit problems in the past will struggle to find anyone willing to lend at reasonable rates & a sensible loan to value. However, if an applicant has CCJ’s (County Court Judgments), defaults or arrears registered over 2 years ago then it may be possible for us to obtain a mortgage with only 25% deposit. If there are more recent credit problems then you are likely to need 50% deposit & the yield would have to be exceptional to make it worthwhile paying the available rates. Contact us for a no obligation quote.
• The days of the amateur or accidental landlord may be numbered as residential lenders are restricting the use of ‘let to buy’ schemes that were popular when a property couldn’t be sold. Instead of disregarding the let to buy mortgage in assessing maximum residential mortgage, many now want income to cover all outstanding mortgages which is not usually possible. Mosaic Mortgages are specialists in this area and can help you navigate the different lender’s criteria to ensure that you get the right mortgage for your circumstances.
• Professional landlords have not feared any better and Lloyds Banking Group have just restricted applicants to 3 buy to let mortgages across the group & many smaller Building Societies will only lend to those who don’t have more than 3 buy to let properties regardless of lender. Fortunately one of the big players, Paragon has just started lending again and they specialise in lending to the professional landlord as well as non standard properties. There have also been some new entrants to the market that will lend to experienced buy to let investors so contact Mosaic Mortgages for more details on available products.

The buy to let market has survived the downturn & lending has started to recover but expect to pay either a premium on rates or a high arrangement fee to obtain a competitive rate. Use our online quotation tool (updated daily) to find the best deal for your particular circumstances, contact us on 01604 330240 or email us at enquiries@mosaicmortgages.co.uk to discuss your specific requirements.