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Buy-To-Let Mortgages: All You Need To Know

Buy-To-Let Mortgages: All You Need To Know

Buy-To-Let mortgages became increasingly popular five months into the Coronavirus pandemic, as there were more people looking to take advantage of the current situation and buy investment properties. The added bonus of the stamp duty holiday relief made it even more enticing, and the market saw a huge demand in houses for sale.

Whether you are an investor in the buy-to-let market or one of the great many “accidental” landlords who rent out their main property whilst living elsewhere, you’ll need to get a specialist buy-to-let mortgage. While it is similar to the standard residential mortgages, there are some important differences you need to be aware of.

  • Most buy-to-let mortgages are interest only. This means you won’t be repaying any of the capital during the lifetime of the mortgage, so it’s vital you know how you are going to pay off the loan or refinance at the end of the term.
  • You will need a larger deposit than with residential mortgage. Typically, you will need a minimum deposit of 25% of the property’s value. The best interest rates will be available to those with larger deposits of 40% or more.
  • Upfront fees are higher than with standard mortgages, usually between 1.5% and 2% of the value of the loan. Be sure to factor this in when comparing deals.
  • The mortgage affordability test is based on the profit a landlord is likely to make from the property. Lenders use projected rental income and a representative interest rate to calculate ICRs (Interest Cover Ratios). Generally, the monthly income must cover at least 125% of the loan repayment.
  • As with residential mortgages, you can choose between a variety of different products including fixed rate, tracker, and discounted variable rate. Interest rates are historically low at the moment and there are very cheap deals around, particularly if you have a large deposit.
  • Bear in mind that there is a 3% stamp duty surcharge applied on buy-to-let purchases. This is still applicable during the stamp duty holiday period.

If you are thinking of buying a rental property, give us a call on 0800 862 0871. We are happy to advise on all aspects of the buy-to-let market. In the meantime, click here to view our current properties on the market.

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What Does The Government’s 95% Mortgage Scheme Mean For Buyers?

What Does The Government 95% Mortgage Scheme Means For Buyers?

During the Spring 2021 Budget on 3rd March 2021, Chancellor Rishi Sunak announced the new 95% mortgage scheme will be introduced to allow more first-time buyers to get on the property ladder with a deposit as little as 5%.

In his speech, Sunak said: “It is a policy that gives people who can’t afford a big deposit the chance to buy their own home.” This will make a substantial difference particularly to those living in more expensive areas, such as London. For those in the capital, it is notoriously difficult to get on the property ladder as price houses are so high.”

The aim is to support home ownership and make mortgages more accessible for buyers struggling to meet strict criteria from lenders, especially those who are first time buyers. Prime Minister, Boris Johnson, declared he wants to ‘turn Generation Rent into Generation Buy’.

The new scheme will enable mortgage lenders to offer loans of up to 95% to properties up to the value of £600,000, excluding second homes and buy-to-lets. Big lenders such as Natwest, Santander, HSBC and Barclays have agreed to provide the mortgages. The mortgages are available from April 2021, until December 31st 2022. 

The new mortgage announcement coincides with the extension of the stamp duty extension until 30th June 2021. Buyers across the UK will be grateful for this extra help to get onto the property ladder, and we’re sure it will continue to strengthen the UK property market. 

If you’re looking to make the move and want to make the most of the 95% mortgage scheme, view our selection of properties under £600k or contact us on 0800 862 0870 to speak to one of our expert agents


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How much deposit do I need for a mortgage to buy a house?

How much deposit do I need for a mortgage to buy a house

How much deposit do I need for a mortgage to buy a house? This article will help you find the answer to this question. Read on.

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What schemes are available to help me get a mortgage?

Talk to our independent mortgage advisors

Buying a home can be a difficult process and for many people, the process of getting a mortgage is the hardest aspect. There is a need to focus on your finances for a considerable period of time before you apply for a mortgage but even with this in mind, if you have a poor credit history, a mortgage lender may decline your application.

However, there is assistance for people looking to buy property and it is important to know what schemes are available to help people get a mortgage. The Government realises it is important to help people get on to the property ladder, and this is why there are a number of schemes that can make the difference in someone applying for a mortgage.

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