Property Investor Mortgage Finance

  • Investment property mortgages – Generally termed buy to let (BTL) mortgages and the main source of finance for investment property intended for the rental market. Normal criteria for these mortgages would be a deposit of at least 25% and the rental as defined the lenders surveyor must be sufficient to cover the mortgage repayment by a significant factor.
  • Let to buy mortgages – Suitable for new investors who own a property and is looking to purchase a second property. A let to buy mortgage allows you to set your residential property up with a BTL mortgage and release any equity to use as deposit on a new residential property. The original property becomes an investment property for the rental market.
  • Commercial mortgages – these can be complex mortgages and are aimed at developers and businesses. The lender will study the proposed business detailed, your ability and experience with that type of business and any accounts from the business and use this information to decide on a loan. These things will take priority over your financial ability to pay the loan.
  • Islamic mortgages – these are special mortgages that do not generally follow the standard criteria. There are only a few lenders specialising in that market and every case will be reviewed separately.
  • Bridging finance – these are loans intended for short term applications. They are often used by investors intending to purchase investment property through auction houses.
  • Secured loans – Used as second charge loans against a property to carry our improvements to the property. These loans tend to be for £10,000 and upwards.
  • HMOs

Mortgages for HMOs

The term HMO stands for houses in multiple occupancy and by their nature are usually quite large and expensive structures that offer the experienced property investor the opportunity to obtain much high rental yields thanRead more

Commercial Mortgages

For the sake of clarity, we will define a commercial mortgage in two distinct ways as described below. Commercial mortgages for businesses – Typical applications as below: Retail businesses – any public facing businessRead more

Investing via a limited company in BTL

Investors are looking at transferring their investment portfolios into limited companies as a way of negating the new tax restrictions introduced by HMRC. There is no simple answer to establish if this is a goodRead more

Investment Property Re-mortgage

It will be important for any property investor and especially those with portfolios of investment property to be certain to ensure that they are obtaining the best financing rates they can. This generally meansRead more

Recently lenders have been reporting a marked slowing in the number of new mortgages being approved. Different experts and lending institutions are mixed on the reasons for this but here are some common themes.

  • Brexit – Over the last three years, this has been a favourite source of blame. Assuming we leave on 31 October as our new prime minister is predicting, we will soon discover the facts of the matter and those that have made the right decision will reap the benefits. Until then investors should look to their own judgement when deciding to purchase investment property.
  • UK house prices – Property values are still rising and we have seen gains being made in Northern cities such as Birmingham, Manchester and Liverpool as well as Scotland. This is in sharp contrast the the traditional favourites of London and the south east where in some districts prices have been falling. This may be affecting investor confidence.
  • UK interest rates – Base rate currently stands at 0.75 percent which is still very low by historical standards. BOE have been indicating for some time now that base rates will rise and property investors may be concerned that such a rise may affect their profit margins.
  • UK lending criteria – Lenders have been taking a much more responsible view of their lending criteria making it harder to obtain finance for investment property. Lenders no longer simply take your income as the measure of your ability to pay but will look at your life style commitments when assessing your suitability for a mortgage.
  • Rental value assessments – Lenders now apply hypothetical rates to establish investment property suitability against rental income to decide whether to lend. This is much more onerous than previous criteria and and will rule out many investment properties that would previously been acceptable..
  • UK employment – the UK is currently enjoying almost full employment but the earning capacity of these jobs is decreasing. This is taking people out of the property owning market and adding to the rental market. This is good for property investors but may well be a major contributor to the slowing of new mortgage completions.
  • Housing shortage – the UK population has been growing sharply in recent years but house building simply hasn’t been keeping pace, Builders will only build if they can be assured of a sale on completion. As mentioned earlier, new build property is now out of the reach on many and these low build rates will be contributing to the low mortgage approval rates.
  • The rental Market – as young people find themselves priced out of the property market they have had to turn to private rental. This initially caused an explosion in investors buying up investment property for this market but recent tax increases in the investment property market has slowed the uptake by investors. This will be a contributor to lower mortgage completions.
  • New investment property rules – As mentioned above, tax changes to relief on mortgage interest payments and increases in stamp duty has reduced the number of properties being purchased by property investors.