What is a Buy-to-let Mortgage?

A buy to let mortgage is for landlords who are either buying a property to rent out or are remortgaging a property in their portfolio.

A complex buy to let mortgage refers to a mortgage that could have been turned down by a traditional lender due to the complex nature of the case. Many complex buy-to-let case applications are declined due to strict lending criteria. That’s where you need Crystal Specialist Finance. We have great relationships with lenders who have flexible criteria and will consider poor credit, first time landlords, mixed use properties and many other scenarios.

How does a Buy-to-let Mortgage work?

Affordability – When assessing affordability lenders will typically base it on the expected rental income of the property, rather than your client’s personal income.

Deposit Required – Usually, a minimum deposit of around 20% of the value of the home is required to secure a buy to let mortgage. However, this will vary depending on your clients’ circumstances, the property type and the lender. When assessing affordability lenders will consider your client's current portfolio and credit history.

Repayment – Most Buy to let mortgages are interest only, which means your client will only pay the interest each month. The capital will be re-paid at the end of the loan term, although capital and interest and part and part are both available too.

What is the difference between residential, semi-commercial and commercial buy-to-let?

There are 3 types of buy to let mortgages, all of which have different lending criteria, advantages and risks. Understanding the difference between them is key, when placing a client case.

Residential

This is the most common type of buy to let, used to purchase a property to rent e.g. HMOs, MUFBs, Holiday Lets.

Semi-commercial

Used for properties with both residential and commercial purposes (mixed use) e.g. a shop with a flat above, or a flat above a restaurant.

Commercial

A buy to let specifically for a business premises or commercial property, e.g. an office block, warehouse unit or retail unit.

Pros & Cons of Buy to let Mortgages

If your client is looking to take out a Buy to let mortgage, it is important to weigh up the pros and cons to ensure it is the right option for them.

Pros

• Generate an income – Often covering your client’s mortgage and providing them with a profit.

• Property value growth – If the value of the property rises over time, so will your client’s investment, which will allow them to sell the property at a higher price in the future.

• Portfolio diversification – Investing in property is a great way for your clients to diversify their investment portfolio beyond just stocks or savings.

• Flexibility – Specialist lenders are now offering more products for complex scenarios, e.g. transfers from a personal to limited company, ex local authority properties etc.

Cons

• Property market fluctuations – If the property market crashes, and your client wants to sell the property, it is likely to be worth less than it was purchased for.

• Regulatory changes & legislation – Landlords are facing challenges such as improving EPC ratings to adhere to new regulations and rising interest rates.

• Higher deposit requirements – Most lenders usually require a larger deposit of 25% or more. This will depend on the clients’ circumstances and lender criteria.

Despite a few challenges, buy to let remains an attractive investment and landlords have adapted their business strategies in response to an ever-changing market. Find out more on how we can help your clients navigate these changes.

When a Buy-to-let Mortgage might be required

At Crystal Specialist Finance we will do our utmost to find a suitable solution for your clients seeking a buy to let mortgage, no matter how complex the scenario. Below are a range of scenarios in which a buy to let mortgage may be required.

• Mixed portfolios – Assisting with the purchase of different properties to add to a portfolio e.g. adding semi-commercial properties to a residential portfolio.

• House in Multiple Occupation (HMOs) – A property in which each individual room is rented on their own tenancy agreement.

• Multi-unit Freehold Block (MUFBs) – A single property split up into multiple self-contained units.

• Transfers from a Personal to Limited Company

• Ex-local authority properties

• First-time landlords

• Remortgaging

Key considerations before taking out a Buy-to-let Mortgage

Before your clients take out a buy to let mortgage, they must understand the financial, legal and practical responsibilities involved.

• Maintenance & property costs – Landlords are responsible for repairs and maintenance on the property they own, including safety checks, landlord insurance, and compliance.

• Exit strategy – Your client will need a long-term plan, whether this be to keep the property and remortgage or sell it later down the line for capital growth.

• Rental income requirements – Many lenders will assess whether the expected rental income of the property can cover the mortgage interest payments monthly. This can vary depending on lender criteria.

Buy-to-let Scenario

Completing on buy to let is second nature to us, whether the case is complex or not.

Here just one example…

A client got in touch looking to capital raise 2 buy to let flats above a restaurant. Due to the client wanting to lend on the flats only, this wasn’t a straightforward case to finance, but not one that Crystal couldn’t source a lender for.

Click here to read the success story.

For more buy to let case studies, click here.

How specialist lenders can help

When it comes to sourcing a buy to let mortgage, Crystal Specialist Finance is the clear choice. We have a panel of 20+ buy to let mortgage lenders who have flexible criteria, and a team of on-hand experts who will do their utmost to ensure a case completes.

You can package a case and keep all client contact or refer whilst we deal with the client directly. Whichever route you prefer, you will get paid 50% of the procuration fee upon completion. That could be up to £1,308 on an average case!

If you’re interested in finding out how we can help with a buy to let mortgage, call our New Business Advisers on 01827 337710. Alternatively, you can submit an application online in under 10 minutes via our secure CrystalHUB. Track a case as it progresses on the CrystalHUB dashboard and save yourself time whilst earning commission.

If you’d prefer to send us an email, you can do so at enquiries@crystalsf.com.

Buy-to-let Mortgages FAQs

What rates are available with buy to let mortgages?

At Crystal Specialist Finance, we work with lenders who offer various rate options. Get in touch and we can provide a tailored quote based on your clients’ circumstances.

What are the borrowing terms for a buy to let mortgage?

Usually, repayment terms are between 5-30 years.

Can we cater for clients that have large portfolios?

Yes, we consider all client scenarios, including HMOs, MUFBs and mixed portfolios.

Can we source funding for limited companies?

We can source buy-to-let mortgage loans for both limited company and individuals. Click here to see which other scenarios we could help find a solution for.

How many buy-to-let mortgages can your client have?

The number of buy to let mortgages your client can have will depend on their financial situation, and the lender involved in the deal. Lenders will consider factors such as your client’s income, credit history and the potential rental income of the properties they own.

How long do buy-to-let applications take to complete?

This will vary depending on the lender, client circumstances and other parties involved. On average, our turnaround time for a complex buy to let mortgage is 8-10 weeks from initial enquiry.

What fees and charges should my client expect with their buy to let mortgage?

There are various fees involved with a buy to let mortgage, including:

• Application fee

• Valuation fee

• Arrangement fee

• Legal fees

• Administration fees