Finding the best buy to let deals is not always about the rate or even the fees involved.
In this article I will prove to why I think you need our services when you’re looking source the best buy to let deals in the UK mortgage market. As always your feedback is much appreciated.
Should you wish some personal mortgage advice in regards to your buy to let mortgage strategies please do not hesitate to contact me by completing our mortgage enquiry form on the right-hand side of this page.
Key factors in searching for the best buy to let deals in the mortgage market
- Initial rate
Buy to let mortgages work very differently from your traditional residential mortgage, and although rate is important, it certainly should not be looked at in isolation as often the lender’s fees (charges) on buy to lets can counter the rate benefit.
- Reversionary rate
In recent years lenders have enticed unsuspecting landlords with very low introductory rates then increased the payments after a 2 to 3 year period. It is necessary to understand the impact of higher reversionary rate and your potential to remortgage to placate the uplift, before you commit to a particular buy to let product.
- Rental calculation e.g. 1.25% of mortgage based on a pay rate of 5%
Keeping within the lenders rental calculation criteria is one of the biggest considerations for a perspective borrower. Just because a lender is offering a 2.99% rate it doesn’t mean that the rental calculation will be based on 2.99%. Some lenders will work this from a higher rate 5%, 6% or even 7%. Which means the £1000 a month rent you receive will have to be worked on 6% and it still has to be 1.25 times higher than your mortgage repayments.
- Fees associated with the product
Lenders fees on buy to lets can be very large. I have seen them go up to 3.5% of the loan amount which at larger loans equates a substantial amount of money. By using a good broker you can try to get the best buy to let deals together with a product which has got lower associated costs. Depending on the size of the loan we can then recommend whether you should go for a fixed fee or a percentage based fee for your buy to let mortgage.
- Restrictions within the lending criteria
Understanding restrictions within the buy to let lending arena is key. Lenders have differing views on key areas such as your own personal circumstances, property type, prospective tenants, number of properties in the existing portfolio, their individual exposure within the portfolio, size and location of the building, and many more.
- Decision in principle process
Just because the lender initially agreed a case it does not mean they will stick to that decision. With the use of our past experience can provide an insight into the likely questions that will ensue on full application and the supporting documents they will require.
- Valuation process
Understanding the lender’s valuation process is without doubt a key factor in selecting a lender. In short, the level of borrowing hinges off of the property value and the rental figure set by the surveyor. If there is a nervousness on your part or uncertainty, we can steer you towards the lenders that use certain valuers to improve the chances of a favourable response. This ultimately protects abortive valuation and switching lender costs.
- Lender’s service levels
The final note should not be underestimated. It doesn’t matter if the lender offers the best of the above if they are likely to take upwards of 3 weeks to assess the paperwork due to continual back logs and subsequently you will potentially lose the property or get gazumped. Due to the level of business we do we know the black spots at any given time and can avoid them.
To conclude we are an independent buy to let mortgage broker and work on your behalf and not the banks so can give you an impartial advice on strengths and weakness of the lenders and their respective service – warts and all!
I hope giving you an insight into the above points as highlighted the fact that finding the best buy to let deals is not just about the rates. The reason the buy to let mortgage market is flourishing is because it is potentially very profitable but there are many pitfalls and by seeking independent mortgage advice from a buy to let mortgage specialist we believe we can add real value into the that finding the best buy to let deals based on your needs and preferences.
For more information on finding the best buy to let deals please call (020) 7993 2044 or alternatively complete our enquiry form on the right-hand side of this page.
Payam Azadi is a partner at Niche Advice Ltd who are Independent Financial and Mortgage Advisers in London.Http iframes are not shown in https pages in many major browsers. Please read this post for details.
Author: Payam Azadi
Payam Azadi is a partner at Niche Advice who are whole of the market Independent Mortgage Brokers. His role is very much focused on Property financing both on residential and commercial lines.