Buy-to-let mortgages for new and existing landlords

Investing in bricks and mortar is still seen as a good long-term investment and becoming a landlord to rent out a property is a way of having tenants’ rental income help pay for the mortgage and other associated costs.

There have been some legislative changes to the buy-to-let market in recent years but for the right property in the right location buy-to-let investment can produce a good return in terms of a high tenancy rate and property value growth.

Clever Mortgages has access to lenders that can help customers even if they have a less than perfect credit profile. These are often underserved by High Street banks and other lenders, and with our extensive panel of lenders we have access to many buy-to-let mortgages for a wide range of customers.

There are a number of things to know about buy-to-let as becoming a landlord is quite different to just buying a house to live in.

Location, renovation and tenants

As with any house or business location can have a major impact on the initial price. With buy-to-let property this is also the case. But there’s also the opportunity to purchase a rundown property in a good location with a view to carrying out some refurbishment work before putting it on the rental market. This could keep the initial cost down, but with a good location yield higher rent.

Most tenants will be put on an Assured Shorthold Tenancy Agreement that usually lasts from six to twelve months. There’s also the option of using a letting agent for a fee, but this will impact on your yield.

Rental cover for your mortgage

Lenders will evaluate your mortgage request by looking at how much rental income you will generate, and put a requirement that it covers more than your mortgage payment. This is called the rental cover and can often be 125% – 140% of the mortgage payment.

Buy-to-let rental yield

A standard way to calculate and compare the viability of a buy-to-let investment is to work out the rental yield. The yield is simply the rental income for the year divided by the annual mortgage cost’s other expenses, multiplied by 100 to give you a percentage. This is important to know as it can tell you how profitable different properties can be, so you can compare different scenarios.

It’s also common to build in time when the property may not be occupied and you’re not receiving rental income – so for example you could work out the yield based on ten months’ rent rather than twelve to see if it’s still turning an annual profit, as you’ll still need to pay your mortgage and other costs every month.

The advantages of buying a buy-to-let property

Purchasing a rental property is often a way to invest for the long-term and has some distinct advantages:

  • There are plenty of mortgages to choose from
  • Monthly income from tenants covers your mortgage and other costs
  • The value of the property is likely to rise over time
  • A low mortgage rate can help boost your rental yield
  • The current rental market is buoyant for landlords
  • The property value is likely to increase over time
  • Options available even with a poor credit profile

How Clever Mortgages can help

At Clever Mortgages we evaluate each case individually as we understand that everyone has their own set of circumstances. Even if you have had credit issues in the past our expert staff will take them into account when looking to find a positive outcome for you.

We will take the time to fully understand your buy-to-let mortgage requirements and work on your behalf to look at all possible options to find the most appropriate solution for your current circumstances and future financial journey.

For every customer our aim is to find a solution that suits your plans, and one that you can afford now and in the future, so make sure to talk to one of our friendly team today.

You can find out more about the range of buy-to-let solutions available through Clever Mortgages here.

Clever Mortgages does not offer advice on the tax legislation surrounding buy-to-let mortgages. As your tax liability could be affected it is recommended that you seek independent advice from a qualified tax adviser.