Buy to let mortgages … tricky but still worthwhile

Whether you already hold a portfolio of investment properties or see yourself becoming a property landlord, it will come as no surprise to learn that obtaining a buy to let mortgage has become a little more difficult of late.

For those trying to build a property empire, the latest set of requirements from the Prudential Regulation Authority has meant jumping through more loopholes to obtain a buy to let mortgage. From late 2017, landlords with four or more mortgaged buy-to-let properties need to provide a full analysis of their borrowing commitments across their portfolio before a lender will agree a further mortgage loan.

With the increased demand for home rental, a buy to let option still represents an affordable and sound financial investment in most cases, based on purchasing the right property, knowing which type of tenants you aim to attract, and fully understanding the rental potential whilst taking into account maintenance and any ongoing costs or fees.

Oliver Bishton from local independent mortgage broker Homeline Mortgages said, “Although the buy to let mortgage market has gone through a turbulent period, we are beginning to see significant changes from lenders. Some new products have recently come to market specifically for the buy to let borrower, with slightly better interest rates and fixed term options of 2 or 5 years. The buy-to-let mortgage you will be offered depends on your circumstances and the lender’s criteria. Typically, they will look for bigger deposits, strong rent to mortgage payments cover and other income streams. You will also need to be prepared for higher arrangement fees and a longer decision period.”

For anyone thinking about applying for a buy to let mortgage, the best advice is not to go it alone. With the new rules and regulations and increased amount of number crunching involved, the services of a good mortgage broker will come into their own.

Olly added, “An independent mortgage expert can really benefit you in the mortgage application process. We have our finger on the pulse of which lenders are offering the most competitive deals, plus we help you with all the preparation and paperwork which can significantly enhance your chances of getting mortgage approval and speed up the process.”

Despite the introduction of the 3% stamp duty levy, and the new stress tests for landlord mortgages, latest figures released reveal that the number of buy to let investors in the UK has hit an all-time high of 2.5m in the latest tax year. “Becoming a landlord is still an interesting proposition for many people, and at Homeline we are always happy to advise on all aspects of your mortgage application. We offer a free initial consultation to ascertain your chances of a successful buy to let mortgage application.”

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A fee may be charged should you proceed with a Mortgage or Protection application. Please ask your adviser for further details. Your home may be repossessed if you do not keep up repayments.