• A Checklist of Information You’ll Need to Supply in Order to Qualify for A Buy to Let Mortgage

  Filed under Articles
  Dec 23

  The detailed terms and conditions of buy to let mortgages understandably differ from lender to lender, but there are several basic bits of information that all UK lenders insist you supply either before or during the application process. Among other things you will normally be required to provide the following at the very least:

  1. Proof of your Deposit

  A buy to let mortgage application will stall at the first hurdle if you can’t provide evidence that you have the means to pay the minimum deposit amount required for the property you want to buy. To do this you need to have researched the minimum deposit amount required by the lender you’re applying to before starting the application process, as UK lenders differ quite widely on the percentage specified. Until quite recently most buy to let mortgage lenders wanted between 30% and 40% of the property purchase price as a deposit.

  This figure has now been reduced by some UK lenders, so that buy to let mortgage deals are now available with a 20% or 25% deposit. You will need to supply proof that you have the deposit amount available or that you can finance the deposit payment in some way.

  2. The Arrangement Fee

  Depending on who your buy to let mortgage lender is, you may be required to pay the arrangement fee up-front; as opposed to adding the fee amount to the capital you borrow. If this is the case then you will again need to show evidence that you have the means to pay the arrangement fee.

  Arrangement fees for buy to let mortgages are normally calculated as a percentage of the property purchase price and not as a fixed fee. This means that the arrangement fee you need to cover will depend on the price of the property you want to buy. For example, a £120,000 property with a 2% arrangement fee will require you to pay £2400 just to get the application process rolling and the buy to let mortgage in place.

  3. Details of the Property you Intend to Purchase

  All mortgage lenders will want to know about the property you intend to purchase however some buy to let mortgage lenders are quite picky about the types of property they will approve buy to let mortgages for. For instance, some think that family properties will do better in the private rental market than one bedroom apartments while others see it the other way round. The result is that some lenders tend to favour specific types of property when it comes to buy to let mortgages.

  To stand a better chance of being approved for a buy to let mortgage you need to find out which lenders are more likely to approve a mortgage on the type of property you want to purchase. A qualified mortgage broker will be able to find this information out more easily that you, and although the task may incur a brokerage fee it will stand you in better stead when it comes to deciding who to apply to.

  4. Predicted Rental Income

  No buy to let mortgage lender is going to approve a loan for a rental property where the rental income fails to cover the minimum monthly mortgage payment. This means you will need to prove that the predicted rental income for the property is enough to cover the mortgage payment at the very least.

  The easiest way to do this is to visit the Rent Service website and find out the average and the maximum amount of rent you can legally charge for the property you want to buy. Print this information out, making sure that the date of the enquiry is shown on the printout, and offer this as proof that the rental income will in fact cover the monthly mortgage payments.

  5. Proof of Personal Income

  Not every buy to let mortgage lender will want to see proof of your personal income but if they do then you should have it at hand. Those lenders that do ask for this information generally offer a slightly lower deposit amount or a lower interest rate, and so feel they are, to an extent, risking more than their competitors. Your proof of personal income will, in these cases, be used as a guarantee that you can cover the mortgage payments during any periods that your property is without tenants.

  Any prospective landlord that can supply the information outlined above is a lot more likely to be approved for a buy to let mortgage than those that can’t. Mortgage decisions are not an exact science though and no application is absolutely guaranteed to be accepted. The key is to make your application as attractive as possible by providing as much information about your finances as you possibly can.

  Tagged as: buy to let, buy to let mortgage, buy to let mortgage lender, buy to let mortgage lenders, buy to let mortgages, mortgage approval
  
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