How do Buy To Let Mortgages Work?

Buy-to-let mortgages are a lot like ordinary

mortgages, but with some key differences,

• Most Buy-to-let mortgages are taken up on interest only so they can benefit from the surplus of the rent after the mortgage interest has been paid.
• The minimum deposit for a buy-to-let mortgage is usually 25% of the property’s value (although it can vary between 20-40

Most lenders would want to see the rental income you expect to achieve is 145% of the mortgage payments and a further stress test of 5%. There are specialist lenders who would stress test the deal more favourable so its crucial you work with a mortgage broker who understands the market.

Some lenders can even go off just your personal income.

Why invest in property? 

Once you buy a property, you can potentially earn a profit in two ways:

Rental yield – what your tenant(s) pay in rent, minus any maintenance and running costs, like repairs, agent fees and mortgage costs.

Capital growth – the profit you earn if you sell your property for more than you paid for it.

Shall I purchase a property in a personal name or a limited company?

Investing in property through a limited company is becoming more popular.

It may be beneficial for you to purchase property through a limited company, or it might be advantageous to continue to trade as an individual. This all depends on your circumstances, which is why it is so essential to seek professional advice before making any decisions. We will be able to put you in touch with our partner accountant to see what’s best.

Can I take money from my business and buy Property? 

Absolutely! As long your accountant is happy that it will not effect the running of the business. Most lenders would just want a letter from your accountant stating that.

Can I get short term finance to do a refurbishment on a property and increase the value of the property?