Making an Offer
When you determine the property you want to purchase and offer should be made immediately to increase the chance of securing the property. It is of course important your budget has been considered before making an offer.
Who can get a buy-to-let mortgage?
Buy-to-let mortgages are usually suitable for those who want to invest in houses and flats, but this option can also be used for commercial premises too. Many people are of the belief a BTL mortgage is risky for inexperienced landlords or new landlords, however even experienced landlords rarely are completely up to date on changes in law relating to property and still lack practical experience. Using us makes it one of the safest moves you can make go get yourself on the property ladder and won’t only help you buy a property but crucially will assist you find the best deal and assist you work out ideal affordability before jumping into a purchase of a property. We specialise in Housing Law and do not branch off into areas we aren’t specialists of, for which reason we work with one of the UK’s leading Mortgage Advice and Comparison companies who specialise in the mortgage sector to ensure you can obtain the best advice and secure the best deal possible.
It can be difficult to get a buy-to-let mortgage if you don’t already own your own home whether outright or with an outstanding mortgage.You must have a good credit record and not be close to the limit on any credit you may have taken out (credit cards, loans etc.).
Lenders will have their own policies such age limits, commonly a mortgage cannot end after you are 70-75 years of age but this of course varies from lender to lender as do other policy terms, but you’ll obtain further information on your eligibility for a BTL by completing our inquiry form below.
How do buy-to-let mortgages work?
Buy-to-let mortgages are in many ways just like ordinary mortgages, but with some key differences:
• Interest rates on buy-to-let mortgages will usually be higher,
• The minimum deposit for a buy-to-let mortgage is usually a quarter (25%) of the property’s value (this will again vary from lender to lender, some lenders may require a lower amount for a deposit)
• The fees tend to be much higher
Most BTL mortgages are interest-only, which means you don’t pay anything off the sum borrowed each month but at the end of the mortgage term you repay the capital in full.
Unlike obtaining a mortgage on a property you wish to live in, BTL mortgage lending is not regulated by the Financial Conduct Authority (FCA) unless you wish to let the property to a close family member (e.g. spouse, civil partner, child, grandparent, parent or sibling). This means that most BTL mortgages are unregulated.
Rental income will in almost all cases cover more than the mortgage payments required to be paid to the lender so the income received won’t simply dissapear towards your mortgage but you’ll have disposal income from the rental income each month too.You’ll have the extra security with our fully managed service that any issue that may arise will be dealt with correctly and quickly whether they are repairs that need to be carried out or an eviction or you may choose to use our rent guarantee service.
How much you can you borrow for buy-to-let mortgages?
The maximum you can borrow is linked to the amount of rental income you expect to receive. Lenders typically need the rental income to be a quarter to a third higher than your mortgage payment (25–30%).
To find out what your estimated rent might be, talk to local letting agents or check the local listing in newspapers and property selling sites to find out rent charged for similar properties or contact us
Check how much property is selling for in a particular area on the Rightmove website.
Find a local letting agent on the Rightmove website.Don’t forget to budget for all of the costs associated with taking out a mortgage.For a reminder of these read our guide Mortgage related fees and costs at a glance.
To find out how much you can afford to borrow use our Mortgage affordability calculator.
Where you can get a buy-to-let mortgage?
Most of the big banks and some specialist lenders offer BTL mortgages. It’s a good idea to talk to a mortgage broker before you take out a buy-to-let mortgage, as they will help you choose the most suitable deal for you.Our guide on choosing a mortgage gives you more information on the different types of broker, this guide has been provided to us by the leading mortgage broker.
Comparison websites are a good starting point for anyone trying to find a mortgage tailored to their needs.
• Comparison websites won’t all give you the same results, so make sure you use more than one site before making a decision.
• It is also important to do some research into the type of product and features you need before making a purchase or changing supplier.
• Find out more in our guide to comparison sites.
Plan for times when there’s no rent coming in, don’t assume that your property will always have tenants. There will almost certainly be ‘voids’ when the property is unoccupied or rent isn’t paid, and you’ll need to have a financial ‘cushion’ to draw on to meet your mortgage payments. When you do have rent coming in, use some of it to top up your savings account.You might also need savings for major repair bills – for example the boiler might break down or there may be a blocked drain. Don’t rely on selling the property to repay the mortgage. Don’t fall into the trap of assuming you’ll be able to sell the property to repay the mortgage – if house prices fall, you might not be able to sell for as much as you had hoped. If this happens, you’ll be left to make up the difference on the mortgage.
Did you know?
From 1 April 2016, Stamp Duty Land Tax is an extra 3% on top of the current rates for buy to let residential properties above £40,000.
Find out more in Everything you need to know about Stamp Duty.
Buy-to-let and tax
If you sell your buy-to-let property for profit, you will pay Capital Gains Tax if your gain exceeds the annual Capital Gains Tax threshold. Also, rental income that exceeds your mortgage interest payments and certain allowable expenses are liable to Income Tax.
Find out more about the tax implications of buy-to-let in Buy-to-let property investments
Find out about Capital Gains Tax rates and annual tax-free allowances on the GOV.UK website
The first step is to set your budget, for which you will need to consider your income and either any savings or the proceeds from the sale of your existing property. If you have a property to sell, LA Lettings can offer you an up-to-date market appraisal of your home that will help you understand how much equity you have to put towards your next purchase.
If you are going to be using a mortgage to make your purchase then it’s important to get this in place before you start looking. LA Lettings works with Which Mortgage Advisers who like us, specialise in what they do, to ensure you receive the best mortgage advice and the best deal to work towards securing your dream home or next investment. The company can assess your borrowing potential and secure you an agreement in principle, which will help you determine how much you can afford.
Once you have your mortgage in place we can continue to assist the purchase of your new home or investment.
As well as the purchase price of the property, it is important to remember other associated buying costs, such as stamp duty, our fees and, if applicable, mortgage arrangement and valuation fees.
The next step: Finding a property
Where is the best place to search for a property?
Approximately 95% of home movers start their property search online, so this is by far the most popular and rewarding place to begin your property buying journey. You can browse the widest number of potential properties availabe in your chosen location on a desktop, tablet or even mobile phone from the comfort of your armchair. On the Reeds Rains website you can you save your searches and receive email alerts of new properties – so why not register with us today?How much can I afford to spend?How much does it cost to buy a house?What is stamp duty land tax?How do I know how much to offer?What does exchange of contracts mean?
Exchange of contracts is the point at which you are legally bound to buy the house and nobody can back out of the transaction.
How it Works
Do you have a budget in mind for your first home?
1. Complete our budget planner to help you see how much you may be able to afford to spend on mortgage repayments.
2. If you book an appointment with LA Lettings referred mortgage adviser they can help you work through the planner.
Do you have enough money saved for your deposit?
1. You are likely to need at least 5% of the purchase price of the house as a deposit.
2. However, if you can save more for a deposit you can often get a cheaper mortgage.
Do you know how much you could borrow?
1. Have a look at our latest mortgage deals to find out likely fees and interest rates.
2. Calculate how much your repayments would be based on different interest rates.
3. Talk to a LA Lettings referred mortgage specialist who will be able to discuss how different lenders have different criteria for how they calculate how much they may be willing to lend you.
Do you know about your credit score?
1. Your credit score could affect your mortgage borrowing ability.
2. You can check your credit score on the internet at sites such as the Credit Expert from Experian.
3. You can improve your credit score by doing such things as registering to vote.
Do you know what type of property you want?
1. Have you thought about whether you want a new build property or a “second-hand” property?
2. How many bedrooms do you want, do you need a garden?
3. Do you know the difference between freehold and leasehold properties? You can use our Glossary to find a brief description.
4. Location – Do you want to live near your work place, your friends, schools etc.?
Do you know how mortgages work?
1. Read our guide to mortgages.
2. Talk to a mortgage adviser, LA Lettings can refer you to a specialist who we work with.
Do you know what happens when you are searching for a mortgage?
1. Have an initial appointment with a LA Lettings referred mortgage adviser
2. Your mortgage adviser will review your needs, current circumstances, and look for a suitable mortgage deal for you from a lender.
3. Apply for an agreement or mortgage decision in principle from the lender. (This is confirmation in writing of a lender’s expression of intent to provide funding subject to certain conditions being met but it is not a formal mortgage offer.)
4. Make an offer on a property.
5. Make a mortgage application to the lender.
Do you know what to look for when viewing a property?
1. Does the property require updating?
2. Are the rooms big enough?
3. Check the bills – council tax, utilities, etc.
4. Check for damp/cracks/mould or damage.
5. What is the location like? – Nearest shops? Good transport links?
6. Could you see yourself living there?
Do you know about making an offer on a property?
1. Make an offer of a price you would like to buy the property for to the estate agent acting on behalf of the seller.
2. Their estate agent will put your offer to the seller.
3. The seller may accept or reject your offer.
4. If your offer is rejected you could make another higher offer if your budget allows.
5. Once your offer is accepted then you can proceed with the purchase and application for a mortgage.
Do you know the legal process of buying a property?
1. We can put you in touch with a legal firm to handle the conveyancing (the legal work necessary when buying a property).
2. You will need to arrange home insurance for your home.
3. You are legally bound to the purchase of the property at exchange of contracts and ownership passes to the buyer at completion.