buy to let mortgages
Buy to let mortgage lending criteria
Information on this page is for information purposes only. It is not intended as investment advice
Buy to let lending criteria
Buy to let mortgages are available to most homeowners with good credit and a verifiable income
The minimum deposit you will need will be 20% of the purchase price, although you will get much better rates with a 25% deposit
You should not assume you will qualify for a mortgage with a particular lender. Mortgage lenders do not have to lend and will only lend in certain specific circumstances.
If you do not meet the lenders lending criteria then the lender will decline your application
Lenders do not generally publish their full lending criteria.
If your application is declined you may lose your survey fee or the delay may mean you may lose the property or you may miss the remortgage deadline
Using a Mortgage Broker
A safer way to proceed is to use a mortgage broker
A mortgage broker provides you with an important source of advice.
A good broker should be able to identify the best deals that you will qualify for and will be able to highlight the important issues
Please fill in our Enquiry form for a free assessment of your situation
Buy to let Mortgage Lending criteria:
Birmingham Midshires lending criteria
The Mortgage Works lending criteria
Most professional landlords borrow the maximum to maximize the capital gearing effect (see investment page)
Buy to let lenders use lending criteria to assess applications. All lenders require that applicants have an independent source of income other than the rental income.
The lender will seek to ensure that if there is a problem with the tenant you have sufficient income to maintain the mortgage payments.
Employed or Self employed
Most lenders prefer that the main applicant is either employed or self employed or retired with a private pension. Lenders will typically require that employees have been with their current employer for at least 3 months.
Self employed applicants should ideally have been self employed for at least 1 year.
Some lenders will specify a minimum earnings requirement. Not all lenders require proof of income.
A mortgage broker is in a good position to advise a particular lenders requirements – fill in the Enquiry form with your requirements
Rental income
Most buy to let lenders have a minimum rental income requirement. The market rental income will need to cover the mortgage payments by a sufficient margin – this margin may vary between lenders
Lenders will ask the surveyor to assess the market rental income.
You can estimate the market rental income by asking a local letting agent for their opinion of market rental income, or you can gauge letting rents by looking on-line.
Most lenders assess rental income based upon the property being let as a single letting unit. This means the property being let to a family or to a couple sharing. You may achieve a higher rental income by letting out rooms individually but only a small number of lenders will accept this method of calculation. Please discuss this aspect with your mortgage broker
When looking at different types of property, be aware that that some properties are easier to mortgage than others. a multi-storey flat in a tower-block will be very difficult to mortgage.
A flat over a shop (particularly a shop which opens late or has cooking smells or noise or uses chemicals) will present some problems. Mortgage lenders view these properties as the first to suffer in the event of a property downturn.