BEST BUY TO LET MORTGAGES

With property prices increasing, and a growing rental market, it makes sense to look into buy to let mortgages. But how do you get the best buy to let mortgage for you? It’s a good idea to compare buy to let mortgages and see which are the best deals for your circumstances. But it’s worth bearing in mind that these mortgages differ slightly to a standard mortgages. Read on to find out more…

    

Higher interest rates

While buy-to-let mortgage is similar to a regular mortgage in many ways, it often has higher interest rate.

Rental income counts!

The rental income as a qualifying factor to the mortgage.

You need more deposit

A higher deposit rate, normally around 25%, and often upto 40%, of the overall value of the home.

OUR EXPERTISE

WHAT ARE THE BEST BUY TO LET MORTGAGES AROUND?

The best buy to let mortgages all depend on your circumstances. By looking at the introductory rate, the main rate and the fees charged by the lenders, you will have an idea of what constitutes a good deal or not. It’s also important to check each mortgage’s APRC (annual percentage rate of charge), which will show you how much it will cost you over the duration of the deal.

Most buy to let mortgages are interest-only, so you only pay the interest each month, while the main debt is cleared when you sell the property. This will mean that your monthly repayments are reduced.

Of course, there are opportunities to get a repayment mortgage – on a tracker or fixed rate – but if you’re running your buy to let as a business, and looking to extract maximum profit each month, interest-only mortgages are usually the preferred option.

What are some things i need to consider when shopping around for the best buy to let mortgage?

One of the biggest obstacles for people applying for a buy to let mortgage is getting the required deposit together. With the average UK house price being over £226,000, this means that a deposit to secure a good buy to let mortgage deal would be around £90,000. Some buy to let mortgages also have restrictions on age and income, preferring applicants to be over the age of 25 and have a minimum income of £25,000. You are also limited to the amount of buy to let loans you have out – some lenders restrict to three, and the total to not exceed £2 million. Ultimately, the most important factor is that you can charge a rental income that is not only in keeping with the standard of property and the area, but is also enough to cover the mortgage repayments and any maintenance – as well as periods of vacancy.

HOW GETTING THE BEST BUY TO LET MORTGAGE CAN BE PROBLEMATIC RIGHT NOW

We’ve seen the problems being faced by people in the property market, especially landlords and anyone interest in owning buy to let property.

The government have made it increasingly harder for landlords to make a living from their rentals, and for people to get in to the buy to let market.

This is thanks to several regulations changes, the end of tax relief, rising stamp duty and a base rate. This is all accumulated in to shrinking profits on rental properties, and an impending slump in the buy to let market.

But there is a chink of light in the murkiness…

"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

HiP as buy-to-let alternative

HOW HIP CAN BE THE BEST BUY TO LET LENDER FOR YOU

HiP provides invaluable help to these individuals in some very simple but game-changing ways:

WITH HIP, YOU CAN ACCESS THE EQUITY TIED UP IN YOUR HOME

It can also act as an emergency fund for any maintenance and repair work on your lets. You can also open up your new house onto the hip exchange and trade equity with a network of investors. This flexibility allows you to be able to comfortable maintain your houses, with the security of rental income and increasing equity that you can count on on a rainy day.

THIS EQUITY CAN PROVIDE A DOWNPAYMENT ON YOUR BUY TO LET PROPERTY

And you can do all this without selling or going through a lengthy remortgaging process

WHICH CAN ALLOW YOU TO WORK WITH PROPERTY THAT WAS PREVIOUSLY DEEMED OUT OF YOUR PRICE RANGE

This democratisation of property ownership can mean less risk, more ease, less worry and more choice – which means your life as a property landlord has become a lot simpler.

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”.

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.

READ MORE

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.

READ MORE

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.

READ MORE

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.

READ MORE

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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