Mortgages fall broadly in to two different camps. Namely, regulated by the Financial Conduct Authority (FCA) and non regulated. The nature and extent of regulation is mainly determined by the purpose of the borrowing or type of property being offered as security and it affects the process of borrowing and the amount of regulatory protection you might get. After reading this section go to regulatory protection for Mortgage borrowers.
These are normally secured against an owner occupied house or a home which is / will be lived in by a relative. Such mortgages are regulated and you should expect to receive full advice and recommendation on a suitable mortgage from your broker.
Specific products have been developed for:
- First time buyers
- Older borrowers
- Those doing a self build
- Those less able to get a high street mortgage at competitive rates
Affordability is determined by proven income so it is important to have up to date income proof to get the best deals. For the self employed, ideally businesses accounts should be up to date and recent although there are lenders who will accept applicants who have only been self employed for a year or so.
The other key considerations are the amount required, available equity and the borrower’s credit history although factors such as age, property location, property type and many other factors will play their part. A good broker will weigh up all of these factors to advise on what is suitable.
Buy to Let Mortgages
Buy to Let mortgages work in a similar way to residential mortgages. However the big difference is that they are mostly unregulated due to the business nature of the borrowing and are often offered and arranged on a non advised basis. Note: If the property is let to a relative it may fall back in to the regulated arena.
Other factors to consider with a BTL mortgage include:
- Rental income – this can be used to support the mortgage payments even if you don’t have a high income from elsewhere
- Interest only mortgages are more readily available
- The rates are usually slightly higher than a residential mortgage
- You will normally need a higher deposit
- Lenders prefer to see that borrowers have some experience in owning and maintaining a BTL therefore getting on the ladder is difficult unless you have a larger deposit
- Interest payments are not automatically tax deductible and stamp duty can be payable – we recommend specialist advice from an accountant to decide on the best way to own your BTL property – as an individual or to set up a limited company. Lenders are available for both scenarios.
Whilst there are some mainstream lenders offering Buy to Let mortgages, there is a huge choice of specialist lenders which service the landlord market and offer quirky products and flexible criteria, so use our service to get the right mortgage.
Speak to an expert at Promise about the options we have available.