Buy to Let Questions
· What salary do you need for buy to let?
This varied between lenders but typically if you buying your first buy to let then many lenders will want you to be earning over £20k-£30k per annum. However there are lenders with no minimum income. Advice is important here.
· Do I already need to be a home owner?
Mostly. Lenders are happier offering Buy to Lets to existing homeowners, however there are some options for first time buyers looking to buy to let.
· How much can I borrow?
The amount you can borrow is typically limited to 75% of the value of the property although in some cases you can borrow 80% of the value. The actual amount you can borrow is dependent on how much rental income the property will achieve and your overall circumstances. Lenders will want the rent to be in excess of the mortgage payment and they apply a rental calculation to determine the exact amount. Advice is also important here.
· What are the disadvantages of Buy to Let?
Tax. Additional stamp duty is payable on buy to let purchases and if the property is held in your personal name then income tax is due on the gross amount of the rental income with only minimal allowances. Capital Gains Tax if you have profited when you sell is also a consideration. Specialist tax advice is important.
If property prices fall then this eats into your capital
Rental voids. If you have a gap in between tenants or they don’t pay the rent then you are still liable to make the mortgage payments. Although insurance is available.
Responsibility. There are increasing responsibilities as a landlord with new regulations, energy efficiency for example, and there is wear and tear upkeep on the property itself.
· Can I live in my own Buy to Let
No. This would be a breach of your mortgage deed and this is not allowed.
· Can I get a buy to let in the name of my limited company?
Yes! This is a growing part of the UK mortgage market given recent changes to taxation. Some lenders will insist the sole and only purpose of the Limited Company is to buy and manage UK residential Buy to Lets, other lenders will allow you to buy a Buy to Let property in an otherwise trading Limited Company. We can help navigate your options here.
· Can I get a Buy to Let mortgage for a holiday let property?
Yes. These are not as widely available but there are increasing options available to the growing holiday let landlord, both in personal name and Limited Company.
