buy-to-let Q & A: Kingswood Associates – Buy to Let questions and answers

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Buy to Let mortgages - Questions and Answers

We thought it might be useful if we listed the questions most frequently asked by our prospective/existing Landlords. Our dedicated Buy to Let team are happy to answer any questions you can think of. Whether you are just starting out in property investment or are an experienced land-lord then you can call them now on 0845 230 3 230 or fill in our online enquiry form and we’ll be in touch.

How is the amount I can borrow calculated?
What Loan to Value ratio can I expect?
Is it the right time to buy more property?
I've heard about gearing, what is it?
Can I just remortgage for a better rate?
What happens if I have no accounts, or they show little profit?
What happens if I have adverse credit?
Are any properties excluded?
What about Commercial Property Investment?
What if I have DSS, Students or Asylum Seekers in my properties?

How is the amount I can borrow calculated?

Buy to Let mortgages are usually calculated with the anticipated rental income in mind. Some lenders also use personal income as a part of the calculation.

What Loan to Value ratio can I expect?

Typically investment mortgage lenders offer 85% of the property value with the purchaser committing the other 15% as a deposit. There are however a number of lenders who will offer 90% LTV.

Is it the right time to buy more property?

If you are taking a long-term outlook it is always a good time to buy: property in 10 yrs time will almost certainly be worth more than it is now. Also, if you feel property is about to fall in value, now is the time to remortgage and get ready to gear up, taking advantage of cheaper prices when purchasing.

I’ve heard about gearing, what is it?

If you have equity in a property, you can release it by remortgaging and use it as deposits for further properties. For example, a property purchased for £100k with an £85k mortgage which is now worth £160k, could be remortgaged to 85% of its current value, releasing £51k in cash. Splitting this into two deposits and arranging new 85% mortgages, you can buy two more properties of the same value, TRIPLING the size of your portfolio. This concept applies no matter what size your existing portfolio.

Can I just remortgage for a better rate?

Absolutely! If you have not had your portfolio arranged by a specialist Buy-to-Let Broker, it is probable that there are rates that you were unaware of and therefore quite likely that a better deal can be arranged for you.

What happens if I have no accounts, or they show little profit?

No problem! Many of the dedicated Buy-to-Let lenders appreciate that you wish to pay as little tax as possible, and are therefore concerned only that the rent achievable on the property covers the mortgage payment by a certain amount. If it does, then they are happy to accept your own declaration of Income, and not ask for certified accounts.

What happens if I have adverse credit?

Again, no problem. There are lenders who appreciate that anyone can go through hard times, and will take a sympathetic view. The rates are also nowhere near as penal as they used to be, with some lenders not loading the rates at all!

Are any properties excluded?

No! Although some lenders insist on an unchanged house as their security, many will happily accept houses converted into flats, HMOs, bedsits, flats above commercial premises, blocks of flats etc. Obviously, any property must be in a suitable condition for mortgage purposes.

What about Commercial Property Investment?

A large number of our Landlords who have started in the Residential Sector look to broaden their Portfolio as they expand - one way to do this is with Commercial Property. It can be very lucrative, with potentially less risk, as a Corporate Tenant may sign for 15-25 years and will both insure and repair the property themselves, dependent on the terms of the lease.

What if I have DSS, Students or Asylum Seekers in my properties?

Again, although some lenders perceive these tenants as more of a risk, others appreciate that this market can give excellent returns and are happy to lend.

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