Buy to Let Mortgage Broker UK

By Kristian Derrick

Last Reviewed: 2nd February 2024

According to Statista, the value of buy-to-let mortgages in the UK in 2024 at this point sits at around £11 billion, showing that the market is booming.

And if you’re in the market to purchase a buy-to-let property, you may wonder if you need the assistance of a mortgage broker, or if you can approach the purchase alone.

It may be tempting to forego the assistance of professional mortgage broker services to save on costs, but this could end up costing you more in the long run.

Below, we answer pertinent questions relating to buy-to-let mortgages and the role of professional mortgage brokers in the process. 

What is a Buy-to-Let Mortgage?

A buy-to-let mortgage is used when the homeowner doesn’t wish to take occupancy of the property personally but will rent it out for a profit.

Fees and rates are typically higher on a buy-to-let mortgage as there’s perceived added risk, most likely because one cannot guarantee that their tenant will always pay in full and on time.

The amount you can borrow for a buy-to-let mortgage is based on your salary and how much you expect to charge as rent on the property.

What are Buy-to-Let Mortgage Terms?

While all buy-to-let mortgage providers UK have their own terms, most follow the same or similar terms as the following:

  • Loan-to-value set at a max of 80% meaning that borrowers must come up with a 20% deposit.
  • Loan options from £100,000.
  • Interest set on variable, fixed, or tracker options.
  • Capital and interest loans or interest-only loans.
  • Amount allowed based on the income you’ll make on the property and how much you make in terms of regular salary.

A note on stamp duties: As part of a buy-to-let property, you must understand how stamp duties work. In general, stamp duties are around 3% higher than a first home’s.

Homes up to £125,000 usually have zero stamp duties, whereas a buy-to-let comes with 3% attached.

For first homes that range between £125,001 and £150,000, you can expect to pay 2% stamp duties and 5% stamp duties if the property is a second home on a buy-to-let mortgage.

Properties between £925,000 and £1.5 million come with 10% stamp duties on first homes and 13% on buy-to-let second homes. 

How Do Lenders Calculate the Max Amount They’ll Give You?

There’s no hard and fast rule on how UK buy-to-let mortgage providers will calculate how much you can borrow, but a “worst case scenario” calculation may give you some idea of how this is worked out. 

First, the mortgage provider will need an annual rental amount to work with, which is done by multiplying the expected rental amount by 12.

Then, divide the amount by 140% to come to a figure. Then, divide that figure by 5.5%.

In 2017, the tax for landlords was increased, which means that worst-case scenario calculations are a safer way for mortgage providers in the UK to estimate how much borrowers can apply for.

There are several instances where it’s possible to borrow more than this calculated amount, such as:

  • Your current salary is large
  • You purchase property through a limited company
  • You get a 5-year fixed-rate
  • Use a lender that doesn’t use the above “worst case scenario” calculation 

When & Why Using a Buy-to-Let Broker is a Good Idea

Many types of buy-to-let mortgages in the UK are available, and each may have its own set of criteria.

A buy-to-let broker has specialist knowledge for different scenarios, including buy-to-let mortgages for:

  • First-time buyers and first-time landlords
  • Foreign nationals
  • Corporates
  • British expats
  • Student lets
  • Large purchases over £1,000,000
  • Several units on property
  • Limited companies
  • Properties for holiday rentals
  • HMO

And more!

A buy-to-let mortgage provider can review your current financial situation and ensure that you only apply for an amount you’ll get approved for and can realistically afford.

Also, when choosing the mortgage type required for your UK buy-to-let, a professional mortgage broker can consider your investment goals and forecasts and ensure you end up with the right package from the right mortgage provider.

Working with a specialised buy-to-let mortgage broker means you’ll have access to offers from buy-to-let lenders, private banks, high street banks, and building societies.

You can save yourself a lot of time, money, and disappointment by using a buy-to-let broker with industry knowledge and experience to match.

Times When the Use of a UK Buy-to-Let Mortgage Broker is Particularly Useful

There are times when using a buy-to-let mortgage broker is particularly useful. These include:

  • When switching from a regular mortgage to a buy-to-let mortgage. This means you’ll move out of your property to another main residence or a rental property so that you can rent out your current property. 
  • You wish to have a regular mortgage but rent the rooms to lodgers. 
  • You wish to rent your property without a buy-to-let mortgage because your circumstances have changed. You will need assistance getting permission from your current mortgage provider to let. 
  • You need to access some of the equity you already have in the existing buy-to-let mortgage. A mortgage broker will help you approach this from the best possible angle with the lender.
  • You wish to have an interest-only buy-to-let mortgage on a UK property. 

Buy to Let Mortgage Broker UK Conclusion

The benefits of utilising the services of a professional buy-to-let mortgage broker are undeniable. You can save time by applying for the right package with the right lender.

You can even get professional assistance with paperwork to ensure the lender has everything they need the first time instead of experiencing delays in the process.

Buy-to-let mortgage brokers know what mortgage providers in the UK are looking for and their criteria. Your chances of getting approved for your buy-to-let mortgage are increased simply by using a broker.

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