Buy-to-let / Residential Investment Mortgages: 

Deposits:

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. 

Loan amounts:

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. 

Other factors:

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. 

Ownership:

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. 

Stamp duty:

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. 

Capital Gains Tax:

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.

Interest rates:

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. 

If you are not happy with the rates that you have received please contact us. We are available on the phone or on email – feel free to book in a call for us to run through your enquiry with you. 

Associated costs:

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: 

1. Repairs and works at the property. 
2. Estate agency fees. 
3. Rental voids – If you can’t get a tenant for your property it is still your responsibility to service the mortgage. 
4. Service charge. 
5. Utility bills and council tax when the property is unoccupied – depending on length of time. 
6. Estate agency fees on sale and purchase.  
7. Tenancy fees / inventory fees. 
8. Solicitors fees on purchase and sale. 
9. Solicitors fees potentially if you have to evict a tenant. 
10. Annual checks and certifications – gas, electricity, fire safety. 

It is important to remember that property values can go down and you may not receive back all the money you have invested in the property on sale. 

Consumer Buy-to-lets:

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:

1. Where a borrower has previously occupied the property and now wishes to rent this out. 
2. This can include properties that they have inherited. 

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. info@pitch4.com

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 info@pitch4.com ref:  Residential Investment Budget planner.