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First Time Buy to Let Landlords
Can a First Time Buyer get a Buy to Let mortgage?
It is possible to obtain a Buy to Let mortgage as a First Time Buyer from some lenders, although the majority will prefer that you have had a residential mortgage first. Becoming a landlord before you have bought your own residential home is often viewed as high risk, although this may be balanced if you have prior landlord experience.
Mortgage Brokers like ourselves have access to the type of lenders who will be willing to consider First Time Buyers as a Buy to Let landlord, however, it’s unlikely that you will find this sort of offer on the high street. Even willing lenders may require First time landlords to provide a larger deposit, or purchase a rental property that has the potential to provide an above average rental income.
What’s the criteria for a Buy to Let mortgage?
Criterias vary substantial from lender to lender, which is why it’s important to seek mortgage advice before you consider purchasing a Buy to Let property. You may need to meet any or all of the following, depending on the lender:
There may be a minimum income threshold or requirement to pass a financial stress check
You credit score will usually play a part in the decision and the higher this is, the better your chances
There is often a maximum age limit of around seventy years on application
Some lenders will expect you to have prior landlord experience and / or own a residential property
As a first time landlord, you may also need to provide extra documentation, such as a reference from your own landlord or possibly additional address history.
How will a mortgage lender assess my application?
Unlike Standard Residential Mortgage applications, Buy to Let mortgages are usually more focussed on the potential rental yield (income) achievable by the rental property. Most lenders will be looking for your property to achieve a rental income equal to 125-145% of the mortgage repayments.
If you’re a First Time Buyer, however, there is likely to be more focus on your personal income, as rental income from Buy to Let property is not guaranteed. As an inexperienced landlord, you will need to prove that you’re able to make repayments on the mortgage, in the event that you experience periods without a rental income.
How is my income used to calculate my affordability?
Buy to Let mortgage applicants will usually undergo a stress check to ensure that they can cover the monthly mortgage payments, however, as a First Time Buyer, your income is likely to be assessed in the same way as residential mortgage applications.
Lenders use a multiple of your personal income to determine the maximum they are willing to lend, usually around four and a half times your annual salary. It’s important, therefore, to consider this when costing up your intended rental property.
How much deposit will I need to put down?
The minimum deposit requirement for a Buy to Let mortgage is ordinarily 25% of the value of the rental property, and whilst it’s possible to find lenders who will accept a 15% deposit, this would generally be reserved for homeowners and experienced landlords.
Can I get a Buy to Let mortgage and live in the property myself?
Once a Buy to Let mortgage is in place, you will not be allowed to live in the property yourself, even for a short period of time, such as throughout renovation or periods of vacancy.
Is it illegal to rent a house without a Buy to Let mortgage?
It would potentially be illegal to rent your property without having a Buy to Let mortgage in place, depending on the circumstances. If you own the property then how you utilise it is up to you. If you have a residential mortgage in place, however, you would most likely be breaching your mortgage contract and it’s even possible that this may be viewed as fraudulent behaviour.
How can Mortgage Advice Centre help you?
Getting a Buy to Let mortgage as a First Time Buyer can be tough, but here at Mortgage Advice Centre, we can help you to find a lender who will guide you through your application. Becoming a landlord can be a highly profitable endeavour but also a little complicated at times, so it’s important to seek experienced advice about the process, and we can offer expert advice on the most suitable mortgage products for you.
Your home may be repossessed if you do not keep up repayments on your mortgage. The Financial Conduct Authority does not regulate some Buy to Let Mortgages.