Usually a larger minimum deposit is required in comparison to standard mortgages. Some standard mortgages may only require a deposit of 10% however on residential investment mortgage / buy-to-let deposits that are required can be typically at least 25% of the purchase price.
The amount you can borrow is often (but not always) reliant on the rental income that the property can generate. The majority of lenders will want to ensure that the rental income that is generated from the property is sufficient to service the loan and allow surplus in the event of void periods, a rise in interest rates, taxation and other costs involved in owning a property that is rented out.
Some lenders will look at other factors aside from your income. This is often referred to as “top slicing”. If you feel that this may be required on your enquiry please feel free to call us and we can help or put you in touch with a broker that will be able to assist with your enquiry.
Unlike a standard mortgage, a residential investment property can be owned in a number of different ways. Investment properties can be purchased in your own name but also in a company name. How a property is held can impact the tax payable on the income received through the rental income that is generated on the property. It is important to seek the advice of an accountant in this regard to ensure that you are fully aware of the tax implications and in choosing the relevant structure for your property ownership. We can put you in touch with a suitable accountant and advise on the implications that are worthy of consideration.
There are also potential implications with regards to the stamp duty you may pay on your purchase depending on what vehicle / way you purchase your property.
If you sell your property at a profit later down the line, you will be liable for tax under the Capital Gains Tax regime. This is also worthy of consideration when weighing up the purchase of a residential investment property.
Slightly higher interest rates may be applicable on buy-to-let mortgages than standard mortgages. At times these may be even higher than expected due to the nature of the property you may be purchasing or other factors.
It is important to remember that there are a number of costs associated with purchasing a property. These can include but are not limited to the following:
Consumer Buy was a type of buy-to-let funding recognised by the Financial Conduct Authority in 2016. This was created for the following cases:
Disclaimer: Pitch 4 Finance does not provide solutions to these types of cases. If you want help sourcing a solution and you fit into one of these categories please contact us and we will help you find a broker who will be happy to help you with your enquiry. firstname.lastname@example.org
Pitch 4 Finance Budget template:
If you would like a budget template which you can use to help you budget your costs please email us here at email@example.com ref: Residential Investment Budget planner.