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Buy to Let & Investment Mortgage Advice

We can assist with mortgage advice and if you’re new to property investment, we can steer you towards the best sort of finance for you. The most common mortgage for landlords is the Buy to Let mortgage, which is a specialist financial product that enables a property investor to purchase a residential property with the specific aim of letting it. These are calculated in a different way to a traditional mortgage on your home, whereby the amount you borrow is based on your income.

Today’s buy to let mortgages have only been around since 1993 and mortgage lenders on these apply what is known as a “rent to interest cover calculation” when deciding on whether to grant a mortgage. This means that the borrower (the prospective buy to let landlord) has to demonstrate that they can generate enough income from a tenant on a regular basis to cover the interest on the mortgage amount requested. New property investors will also need a non-related income of £25,000 to £30,000 per annum in addition to the potential rental income from the property.

As with other mortgages a buy to let borrower will be asked to supply a deposit as part of the property acquisition process. Mortgages for buy to let investors are often available for up to 85% of the loan value sum (LTV), which means the borrower would have to have at least 15% of the purchase price of the property as a deposit

It’s dependent on the lender what RTI or rent to interest cover would be required but as a guideline it’s normally between 100 and 130% of the monthly interest payment. In general there are two types of mortgage available, repayment, whereby the investor pays interest and some of the capital each month on the mortgage or interest only, which have tax benefits in that interest can be off-set against tax, reducing the overall tax liability.

Repayment mortgages have their advantages too in that these are more suitable for investors using property as a safety net for later years – i.e. setting themselves up for a pension or looking to build a small portfolio of properties. The capital repayments made mean the investor can pay the loan off by the end of the term leaving nothing to be found.

Of course this is all part of investment management and why it’s essential to get the very best advice from an expert property management agency such as Saxons property, who can advise you on the best financial products for your tax situation and requirement. Saxons work closely with tax and financial specialist to ensure that you get the very best advice to maximise your return on investment.

For further information about buy to let mortgages and property investment please call 01206 517777 or info@saxonssales.com 

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