HOW CAN HIP HELP YOU WITH A BUY-TO-LET MORTGAGE?

At HiP we allow you to access your property wealth, unlocking the equity in your home. This can go towards the substantial deposit needed for a buy-to-let. Through us you can work with third parties to get a better deal.

    

WHAT IS A BUY-TO-LET MORTGAGE?

A buy-to-let mortgage is a loan to buy a house which will be rented out to tenants and not lived in by the borrower. They are usually priced at a higher rate than a standard mortgage, as they’re regarded as a business transaction – you should receive rent that should more than cover the cost of the mortgage repayments.

Buy-to- let mortgages have a whole host of benefits:

However, there are a few downsides on applying for a buy to let mortgage with traditional lenders:

They provide a source of income

Applying for a buy-to-let mortgage allows you to make the step to becoming a property landlord.

They provide a long term investment

Keep it for a few years, or several decades, and you should get a significant return on investment.

Mortgage rates are at their lowest

Which is currently allowing investors to stack up on deals.

Rates are rising

Right now, these low rates are beneficial, but they will rise. You need to be sure that you are financially secure when the rates do go up.

Tax rises

Buy-to-let mortgage relief has now been replaced with 20 per cent tax credit, meaning a sizeable tax rise.

Extra stamp duty

Landlords have to pay an extra 3 per cent stamp duty on property purchases since April 2016.

HOW DOES A BUY-TO-LET MORTGAGE WORK?

The process of getting a buy-to-let mortgage is similar to applying for a standard mortgage.

Apply for mortgage with HiP

FIRST, YOU APPLY

And see how much you are eligible to, how much you can afford and work out the estimated costs of running and maintaining the house.

Apply for mortgage with HiP

FIND A PROPERTY

Then you can start looking at properties to buy that fit your budget.

Apply for mortgage with HiP

CONVEYANCING AND COMPLETION FOLLOW

Like a normal mortgage, but there’s also other things that need to be carried out, like organising tenancy deposits, tenancy agreements, and organising repairs and maintenance.

Apply for mortgage with HiP

THEN, YOU GET THE AGREEMENT IN PRINCIPLE

Usually from your mortgage advisor who will give you the AiP. This is confirmation that they will lend you the agreed amount of money.

Apply for mortgage with HiP

MORTGAGE APPLICATION

Once you make an offer on a property and it’s been accepted, you’re ready to start your mortgage application.

Apply for mortgage with HiP

You are ready to let the property

After all the work is done you are ready to start letting your property out to the tenants.

Our expertise

But, is it possible to get a buy to let mortgage with very little income?

One of the biggest obstacles that face potential landlords is gathering together a big enough deposit on a second property.

Most lenders want a 25% deposit, and require rents to cover 125% of the mortgage repayments. On top of this, there are hefty arrangement fees on buy-to-let mortgages.

The banks will also want to know if there’s any outstanding work that needs to be done to make the house habitable, and you will be asked to consider how you will cope financially if the property lies empty for a month or two.

Lenders will also want to go through the same checks as they would with a standard mortgage, so your income and spending habits will determine their decision to grant you a mortgage.

So there are a lot of things to consider when applying for a buy-to-let mortgage – and because of the high number of requirements, not everyone is in the position to do it.

WHAT WE AIM TO DO

BUT WHAT IF THERE WAS A DIFFERENT WAY?

With HiP, we do things differently. We focus on rising property value, rather than your employment history. HiP can help people achieve their goal of getting a home to let, even if you currently have no job or are self-employed. We think it is more important to allow homeowners to access their home equity more quickly and easily than ever before so they can fulfil their ambitions. Previously, getting your hands on your equity meant either selling or remortgaging.

HIP LIKES TO DO THINGS DIFFERENTLY

We allow you to tap into as much or as little equity as possible, for whatever reason. And by the simple act of letting people access their property wealth, exciting things can happen. Equity in your home can supply the deposit needed for your buy-to-let mortgage for example. So you can take out what equity you need from your existing property to put towards a deposit – all without selling or going through a lengthy remortgaging process.

NOT ONLY THIS…

You can open up your new house onto the hip exchange and trade equity with a network of investors. Which means you could buy a property that the traditional mortgage lenders deemed out of your price range. All this without losing ownership of your property.

AND THERE’S MORE…

This easy access of equity allows you to avoid taking out expensive loans to cover costly repairs such as re-roofing one of your properties, repairing any flood damage etc. When large sums of money are needed for a big repair or renovation job, you can pull out equity on any homes you may own to cover the costs. This flexibility allows you to comfortably maintain your houses, with the security of rental income and increasing equity that you can count on on a rainy day. In fact, thanks to hip re-working the rules on home ownership and unleashing equity, being a property landlord has never been so attainable.

HOW YOU BENEFIT WITH HIP

HiP is the NEW Way
to finance property

HiP Property: Our Aims

Reinvent the way you look at property investment

HiP is hugely beneficial to property owners, changing the way we can use bricks and mortar into something with far more fluidity than ever before. It is a debt and equity exchange, with investors all over the world interested in putting their money into property.

Turn Your Property Into a Bank Account

For you, this means a democratised property market; withdraw money from equity without moving, borrowing or losing ownership, use your equity to cover your monthly mortgage repayments, or trade your equity against your mortgage.

Flexibly in the high-yield property markets without limits

We allow you to do all this, and much more, without the penalties, costs and charges that a traditional lender would impose. Whatever your property investment or finance needs may be, HiP is on hand to help you take your next step.

HiP is regulated by the FCA

HiP UK will be regulated by the FCA*

And have an agreed licence for trading in the UK and Europe. *As we go live these permissions are being reviewed.

HiP is based in London

HiP UK is based in London.

HiP's 20+ staff operate from Camden, London. With registered address in Bristol.

HiP is award winning

HiP is award winning

We have won an awards and been shortlisted for more. We came second in the worldwide PropTech Innovation Awards and as Bronze in the Digital Impact award 2017 for “Best use of digital by sector”.

What people are saying about HiP

HiP is creating a buzz in the property world, but especially in the first time buyers market.

"Hip has incredible potential. It brings accessibility and transparency to the property market for owners, occupiers, investors and developers, and allows them to take control and leverage the balance of their debt to equity to their own advantage."

Paul Danks,

Newmark Grubb Knight Frank

“HiP could solve the UK housing crisis”

 

Peter Bill,

Author of Planet Property

"It’s a game changer, and a very exciting one."

Sophie Eastwood,

Global board director of Young Entrepreneurs in Property (YEP) and founder of specialist property PR consultancy, Holistic

Register your interest

Just fill out the form on this page now, and you’ll be the first to find out about HiP, which we are busy creating. We can’t wait for you to join the property revolution.

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Frequently Asked Questions

WHAT IS THE LAW AROUND UK BUY-TO-LET MORTGAGES?

It’s well worth finding out about the rules surrounding buy-to- lets before you make the decision to apply. Borrowers are subject to more stringent ‘stress tests’ on their buy to let mortgage applications. According to the Bank of England, this is in a bid to reduce irresponsible lending. Lenders will review your entire portfolio when making a decision on one mortgage application. This has caused problems with those landlords who may have one or two properties underperforming, profit-wise. Even if the rest of your portfolio is more than making up for this small shortfall, it could be detrimental to your mortgage application.

READ MORE

CAN YOU LET A PROPERTY IN THE UK WITHOUT A BUY TO LET MORTGAGE? WILL THE BANK FIND OUT?

If you own a property and rent it out, it is advised that you inform your mortgage lender as soon as possible about this change in circumstances.
Renting out your property on a standard mortgage will be infringement of the legal conditions of your contract, and you could face severe consequences.
Since 2013, banks and lenders have been chasing ‘accidental landlords’ and checking any properties which have been advertised on the rental market without their consent.
Letting your lender know about your wish to let to a third party is easily arranges, and will require you to obtain a ‘consent for lease’ document from your bank.

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CAN I GET A BUY-TO-LET MORTGAGE WHILE I HAVE BAD CREDIT?

They will usually demand a larger deposit and potentially higher rates. It is usually easier to obtain a buy to let mortgage with a less than gleaming credit score than a standard mortgage as you will be covering the mortgage repayments with the rental yield.
However, HiP allows borrowers with bad credit to get on to the buy-to- let ladder far more easily than most traditional lenders.

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How does a buy-to-let mortgage work and are they good?

A buy to let mortgage traditionally works by calculating the rental yield of a property to see if its workable with the mortgage repayments. Once the agreement has been worked out, you’ll pay a deposit to secure the mortgage. During this time, you will find tenants that can fill the property, ideally credit check them and get them to sign a tenancy agreement. They will then cover the cost of the mortgage repayments each month. To make it worthwhile, there should be extra, normally 25% extra, for you to use as profit or invest back into the house on any repairs.

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In the UK, if I get a mortgage, how long do I have to live in the property until I can rent it out?

Depending on the terms and conditions of the mortgage, you can rent the house out at any time. However, some lenders will refuse point blank to change a particular mortgage deal into a buy-to- let, so it is important to read the small print and discuss the possibilities when you take out a standard mortgage.

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Can I buy a property on buy to let and rent it to myself (UK)?

Depending on the terms and conditions of the mortgage, you can rent the house out at any time. However, some lenders will refuse point blank to change a particular mortgage deal into a buy-to- let, so it is important to read the small print and discuss the possibilities when you take out a standard mortgage.

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Is it better to get an interest only or repayment mortgage for a buy to let property?

Most landlords will choose an interest only mortgage over a repayment mortgage for their buy to lets.
The main reason for this is that landlords invariably see their properties as long term investments.
Interest-only mortgages are also flexible and tax-efficient – even though the tax rules on buy to lets is changing.

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The tax regulations around buy-to-let mortgages in the UK changed last year. Is it still profitable to do buy-to-let?

Profound changes to the way buy to let mortgages work have dramatically altered the livelihoods of a lot of property landlords. In 2017, changes to the law made it no longer possible for higher rate taxpayers to offset all their mortgage interest against rental income before working out what tax they owed. This led to higher tax bills, even if their income had not changed.

This is being phased through to 2020, where it will be replaced by a 20 percent tax credit.

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What do banks look for to approve an applicant for a buy to let mortgage?

Banks and lenders will look at a number of things when approving you for a buy-to-let mortgage. These include:
Your credit score
Your income
Your spending habits
Any criminal records

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Can You Get Buy To Let Mortgage As First Time Buyer?

While it’s totally possible to have your first mortgage as a buy-to- let, most lenders prefer borrowers who have had a standard mortgage prior to taking on a buy-to- let mortgage.
If you are approved, you will have to prove that you are not living in your own buy-to- let, and you will also have to pay a bigger deposit and higher rates than a standard mortgage.

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How are repayments calculated in a buy to let mortgage?

Repayments on a buy-to- let all depend on how much you’ve been approved to borrow. Your mortgage will be based on the amount of rental income that the property can expect to bring in.
Repayment amounts will differ from lender to lender, depending on the mortgage deal, but it will be calculated by working out the value of the house and the expected monthly yield from rent.

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HIP INTERACTIVE PROPERTY LIMITED.,
6.20 World Trade Center,
6 Bayside Road, Gibraltar, GX11 1AA.
Company # 116550.

HIP INTERACTIVE PROPERTY UK LIMITED is registered in the UK, and adheres to The Standards of Lending Practice.

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