Essentially there is little difference between
process that one follows for a buy to let mortgage in UK than there is for any other type of mortgage. The lender still has to consider your credit worthiness, value of property, how much down payment you can afford and all of other usual considerations. However, in addition, lender will usually be interested in what market is for letting properties in same area as one that you are thinking of investing in. The lender will look at property taxes and average rents for similar properties. Other than those particulars, however, process moves along nearly same.A buy to let mortgage can be arranged for either commercial or residential property. Terms can range from between five to forty-five years. There are fixed and variable interest schemes available, and lender takes an interest in your property just like with any other mortgage so your property is still at risk if you fall into arrears. One difference is that a lender will consider your potential cash flow from rental income as part of your available money to repay loan under some circumstances.
Because not all lenders view buy to let mortgages as a risk that they are willing to take, your best route is to choose a mortgage broker who specializes in buy to let schemes. This way you have best opportunity of getting you application reviewed by largest number of lenders who are likely to make a decision in your favor. Since you do not have to pay a fee to engage broker there is no reason not to take advantage of their services.
Before you buy
You should work with either a commercial or residential real state broker, depending upon type of property you are looking to invest in, who understands buy to let market in area that you are considering. Choose an agent who is bonded and who has a large portfolio of potential properties for you to review.
Have your broker help you choose areas that are compatible with type of property that you want to buy. Choose property that matches needs of area. For example, you might find it hard to fully let an office building in an area that is used primarily for light manufacturing. Likewise, a warehouse might not go over well if it is surrounded by an office park complex. If you are thinking about purchasing residential property with your buy to let mortgage then make sure that you look in neighborhoods where there are already properties for let. It may be very hard to let a home in a neighborhood populated exclusively by high-income home owners.
Planning your cash needs
You should also determine maximum that you are willing to spend to buy property. Besides considering purchase price you will need to determine your available down payment and other expenses such as services of a solicitor, stamp duty, survey/valuation fees, broker fees etc. You should also consider after-purchase expenses including remodeling to make building fit for its intended usage, utility deposits and agent's fees if you plan to use a letting agent to attract and vet tenants.
Other expenses are sure to include insurance, routine property maintenance plus ground rents (if applicable) and property taxes. Usually your tenant is responsible for utilities after they move in as well as any Council Tax, TV licence fees, and like.
