The Financial Conduct Authority does not regulate some types of commercial or buy to let mortgages in Middlesbrough.
In the world of mortgages, there are many different routes that a property purchaser can take. From first-time home buyers taking their first steps onto the property ladder, to homeowners’ remortgaging, holiday lets, and HMO’s. Depending on the situation there is a lot you can achieve on your mortgage journey.
One mortgage area we often encounter when we speak to new or experienced landlords is a buy to let mortgage in Middlesbrough.
A buy to let in Middlesbrough will be classified as an investment property, which means that you are prohibited from living in it personally, it is only there for profit. If you have privately rented in the past, you will have been living in a property with a buy to let mortgage attached to it.
For a property to count as a buy to let in Middlesbrough, it must be intentionally mortgaged with the landlord making clear their plans to rent it out, and not live in. The tenant will pay rent monthly, which should be able to cover the monthly mortgage costs, as well as a little more.
There are many different routes that you can look at to figure out whether you are eligible for taking out a buy to let mortgage in Middlesbrough. Some of these routes can include the type of property you are looking to purchase, how old you are, as well as if you are an experienced or first time buyer, buy to let landlord.
The biggest factors a mortgage lender will consider are your affordability, minimum deposit requirements, and current credit score status.
So that you can prove your eligibility for taking out a buy to let mortgage in Middlesbrough, you must first prove your affordability to the mortgage lender. Many mortgage lenders will have their basis for this centered around your projected rental income.
The projected rental income is the amount your mortgage lender believes you should charge in rent to cover all your monthly mortgage payments, as well as additional funds. They will have a specific requirement for this, and the mortgage lender will calculate it with the value of the property.
As well as using what they deem is the projected rental income, some buy to let mortgage lenders will also have their own minimum income requirement, which is typically around £25,000, though this is entirely dependent on the mortgage lender you will be borrowing from.
Here at Middlesbroughmoneyman, we have experience in working with buy to let mortgages in Middlesbrough. Our mortgage advisors in Middlesbrough will help you find the most suitable mortgage lender for your plans and the most suitable mortgage deal.
As is generally standard with most purchases, you must put down a deposit for a buy to let mortgage in Middlesbrough. Generally, the minimum for this is about 20-25% of the value of the property, although this may vary depending on your mortgage lender.
This is so that the mortgage lender has a reduced risk. With a much higher deposit, you borrow less money from your property. This, in turn, will open you between a loan of 75-80% to value, giving you access to much better interest rates.
If you do fall into the category of a high risk purchase, say if you’re looking to take out a buy to let mortgage in Middlesbrough with bad credit, you may be asked to put down a deposit that is even higher than that.
You may be eligible for a buy to let mortgage in Middlesbrough even if you have a low credit score or a history of bad loans, although your choice of mortgage lenders will be greatly reduced. There are plenty out there, who may not even lend at all to someone with bad credit.
For mortgage lenders who are still willing to help customers in these kinds of situations, they will look at factors such as how serious your bad credit is and why it is that way. You may also need to put down a larger deposit.
Before you apply for a buy to let mortgage in Middlesbrough, you will of course first need to find a property on which you would like to make a purchase on.
Next, book a free mortgage appointment and speak with an expert buy to let mortgage advisor in Middlesbrough, as they can confirm whether you are eligible, find the most suitable deal out there for you, and supply you with an agreement in principle.
At this stage, you will have the freedom to make an offer on this property, which will start your full mortgage application process, provided you have accepted your offer.
You will find that most people will take out their buy to let in Middlesbrough as an interest-only mortgage. This means you only pay interest per month, which will lower your monthly outgoings.
Once your term has reached its conclusion, you will owe the capital balance that remains. This is usually paid off by selling the property or taking out a remortgage and moving it to a repayment mortgage. You may also need to set up a repayment vehicle to cover the cost.
Whilst an interest only mortgage tend to be more tax-efficient and popular of the mortgage types for a buy to let in Middlesbrough, you are still also able to take out repayment mortgages on your properties. This means that you pay a combination of capital and interest per month.
While this will of course increase your monthly mortgage payments, it will mean that equity in your property can grow. At the end of your term, you would own your property directly without having to pay capital to the mortgage lender.
As mentioned, a mortgage lender will want to stress-test your projected rental income, to review the amount you need to be charging in rent, so that you can cover the cost of your monthly mortgage repayments.
As mentioned previously, a mortgage lender will want to stress-test your projected rental income, to review the amount you need to be charging in rent, so that you are able to cover the cost of your monthly mortgage repayments.
In terms of the amount, you want to borrow, you are not limited if your projected income can cover the amount, you are asking for. That said, a mortgage lender will want your projected rental income to be more than your monthly payments by a certain amount.
For you to be able to apply for a buy to let mortgage in Middlesbrough, you will also need to give your mortgage lender a selection of documents before you proceed. This usually includes proof of your income, deposit, ID, address, bonuses and commissions, and your current or last P60.
Any self employed mortgage applicants, will usually need to provide your SA302 tax returns. Existing landlords may also be required to give proof of rental income, which usually comes in the form of an ARLA-regulated report, as well as a mortgage statement of all your existing properties.
Before taking out a purchase to let the mortgage in Middlesbrough, you will find that your mortgage application is progressing much faster than it would otherwise have.
Of course, as would be the case with any mortgage, you will have basic costs. You will obviously need to put down a deposit, so that is a larger cost. Then there are other costs like mortgage arrangement fees, application and broker fees, and monthly mortgage payments.
Also, you may have other fees you will need to pay. Some of the most common fees you pay include valuation, product, and mortgage exit fees. Additionally, there may be solicitors’ fees and disbursement fees, as well as stamp duty.
Here at Middlesbroughmoneyman, we can provide more accurate mortgage advice in Middlesbrough on the potential stamp duty rates you will be paying. If you ever want to leave your purchase to let Middlesbrough early, you may have to pay an early repayment fee (ERC), which can be quite expensive.
Finally, you need to think about the types of costs that go beyond what you would already pay. Landlord insurance is also something that you will have to think about, as well as any letting agent fees, income tax and the general upkeep of the property, such as making repairs.
Depending on the mortgage lender and your personal and financial situation, all the different costs associated with buying to allow mortgages in Middlesbrough may vary. Not all of this will be considered, although your mortgage advisor in Middlesbrough will make sure you are aware of all the costs involved.
You can indeed, you can always remortgage a purchase in Middlesbrough. We tend to find most landlords looking to take out a buy to let remortgage in Middlesbrough as a way of releasing equity from the property, with the intention of putting a deposit down on another property.
The equity that is in your buy to let property will work slightly differently than a standard residential property, if you currently have an interest-only mortgage. Normally, your balance and interest will decrease together, creating a much larger value and balance gap.
If you only have an interest to buy to leave Middlesbrough, only interest will decrease. This means that the equity of your property depends on the amount of deposit you have deposited and what the value of the property is now. Speaking of interest only mortgage, you may wish to also pay the capital balance as well.
To do this, you would remortgaging your interest only to let the mortgage in Middlesbrough on a repayment mortgage, which would increase your monthly mortgage payments but give you the opportunity to pay capital and interest at the same time.
Though you may have limited options, it may be possible to get a buy to let mortgage in Middlesbrough as a first time buyer in Middlesbrough. When you look at the first time buyer buy to let mortgage options, your deposit will need to be greater, so that you can borrow the amount you need.
Additionally, please also bear in mind that in doing this, you would lose out on other benefits that first time buyers would get, such as stamp duty, because it is not a main residence for you and generally, buy to let landlords will be paying stamp duty.
For many first time buyers in Middlesbrough, becoming a landlord can actually be a really useful way to give a boost to your income, prior to affording a mortgage of your own on a residential property that you would like to live in.
Always remember that in situations like these, a mortgage lender will assess you on your second purchase, knowing that you already have a mortgage to your name, which in turn could affect future affordability or reduce how much you could borrow.
It’s crucial to any first time buyers in Middlesbrough when applying for a mortgage. Having a high credit score is a helpful factor. It ideally means a higher chance of you getting accepted and being successful with your application.
Although this doesn’t mean you’ll be guaranteed acceptance, though, each lender has their internal scoring systems.
Each lender has their criteria that they have developed over the years. Suppose you’ve failed with one lender not to worry. Mortgage lenders may be inclined to be more lenient, and it is down to your Mortgage Advisor in Middlesbrough to match you with the lender that’s right for you.
There are multiple credit reference agencies in the UK; we recommend Experian and Equifax. It is a good idea to look into many of these agencies as possible in advance, to give you a more specific idea of your credit score.
Furthermore, it is also plausible that some of these agencies hold inaccurate information. So, by checking with multiple agencies, you can be sure that this information gets appropriately amended.
Multiple credit searches can have adverse effects on your credit score. Be on guard of using price comparison websites which are known to be significant credit culprits searching on individuals.
If you are applying for a mortgage soon, it may be wise to apply for additional credit afterward. Whilst having some credit and paying it back is a good thing for your score in the long run.
Lenders prefer to see you leverage your borrowings right before setting up a mortgage application.
Making sure you’re registered on the electoral roll increases your credit score. It indicates stability which lenders like. Ensure your name gets spelt correctly and that it’s your current address which is registered online.
If you aren’t registered, it’s simple and easy enough to do this online.
If you max out your card each month, your credit score will get lowered. Utilizing a credit card to keep on top of your payments each month is a preferred method. It’s a good indicator of your lender that you are good at managing your money.
The main red flag in a lender’s eyes is if you exceed an agreed card limit or overdraft. The reason lenders watch over this is because they want to know you’re able to take your finances responsibly.
Sometimes it can get perceived on your credit report that you are living in two places at the same time if providers have yet to get told that you have moved houses.
It is pivotal that the addresses which you’re updating get spelled correctly; If you have been residing in a flat, this can be a bit more complex as the address can get formatted in different ways.
If you no longer use individual store/credit cards, you should get into contact with the providers to close the account for extra security. In the short term.
This could get seen as having a brief impact on your score as the lender can’t tell who’s closing the account, e.g. you or the provider, but this will be for the better and an advantage to you in the long run.
It’s a great thing to do to reduce your chance of becoming a victim of fraud if you don’t notice you have a lost a card which you may use regularly.
Many consumers feel that credit scoring is an unfair way of applications getting assessed through lenders themselves are indifferent to this idea as it makes their overall job more manageable.
It is more cost-efficient for them to operate this way and computers give more consistent outcomes. On the other hand, some lenders do still do it the old-fashioned way but still apply the same rules about the number of defaults and CCJ’s they will allow.
When setting up your application, be sure your report is up to date to increase your chances of being accepted the first time. The more in-depth information which your specialist mortgage advisor in Middlesbrough has at hand, the better.
In the beginning of the mortgage process, first time buyers in Middlesbrough will very quickly realise that there are lots of different options available to you as a customer. Below we have put together a list of the most popular types of mortgages available on the market, hopefully answering any questions that you may have. If you would like to speak further with a mortgage advisor in Middlesbrough regarding any of these, please do not hesitate to get in touch.
A fixed-rate mortgage is a simple form of mortgage wherein your monthly payments are going to stay the same for a set period of time. You are able to set the length of which you want to fix your payments for yourself, with standard choices being 2, 3 or 5 years or sometimes longer. Even if there happen to be any major changes to inflation, interest rates or the economy, you know that your mortgage payment, usually your biggest outgoing, will stay consistent.
A tracker mortgage will follow the Bank of England’s base rate. What this means is that the lender that you are with does not actually set the interest rate themselves, thus making it potentially unpredictable due to the potential for it to change. You will likely be paying a percentage above the Bank of England base rate. An example of this would be if the base rate is 1% and you are tracking at 1% above base rate, that means that you will be paying a rate of 2%.
By taking out a repayment mortgage, this means that each month you will be paying back a total combination of capital and interest. Providing that you keep your payments going for the full length of the mortgage term, the mortgage balance is almost certainly going to be paid off at the end and the property will become yours.
This is widely considered to be the most risk-free way to pay your capital back to the lender, especially as in the early years it is mainly the interest that you are paying and your balance will reduce at a slightly slower pace, especially if you have taken out a term over 25, 30 or 35 years. Your circumstances will change within the last ten years or so of your mortgage, as your payments will be paying off more capital than interest and the balance will come down at a quicker pace.
Whilst many look into buy to let mortgage advice in Middlesbrough are set up on an interest-only basis, taking out a regular residential mortgage in the form of interest-only is a lot more difficult and not seen as often.
It is a lot less likely for lenders to offer an interest-only product to applicants these days. That being said, there are very particular circumstances where this can be an option. These options can include downsizing later in life or to use the capital to pay off other investments. Lenders are very strict when it comes to offering these products now and the loan to values are a lot lower than they used to be.
With an offset mortgage, the lender will set you up a savings account to run in tandem with your mortgage account. This is quite in an interesting one in how it works. Let’s say you have a mortgage balance of £100,000 and £20,000 is transfered into your savings account; you would only be paying interest on the difference between the two amounts, so in this case it would be £80,000. This can be a very efficient and financially savvy way of managing your money, especially if you are a taxpayer with higher rates.
If you have been residing in a council property for a certain amount of time, then you may qualify for a Right to Buy mortgage. If you are granted a Right to Buy Mortgage, then you will be able to receive a discount from open market value if you decide to purchase the residence.
The discount you receive will act as your deposit. The only cash you will need within the process will be for fees. Additionally, some Lenders will allow you to borrow additional money for Home Improvements – The local authority must grant you permission to do the works for this to be applicable.
The popularity of the Right to Buy Scheme in Middlesbrough was prominent in the 80’s but has seemingly been controversially political. The main reason that a segment of the general public were against this scheme would be down to the matter that it was taking homes out of the public sector when a housing shortage was already happening.
Though many mature homeowners got onto the property ladder via Right to Buy and as such many of the homes on council Estates are now privately owned.
If you want to obtain a Right to Buy Mortgage, you will need to check that you do actually qualify to purchase the property or not. You will need to get an application form (RTB1) and from there, your Local Authority will send someone so that they can value your property and inform you of how much it is worth.
A percentage will then be calculated for the discount that you are entitled to and will write you an offer to proceed with the application. If you do indeed wish to proceed, then the next step is to sign and return the form within the pack which is forwarded to you by the Local Authority and then you will need to set about trying to get a mortgage.
The amount that you are eligible to borrow is calculated in around the same way as any other mortgage would be; based on your income and expenditure. It is important to remember this fact so you are aware that you should cut out any unnecessary spending such as unused subscriptions and existing memberships which were set up before making an application. You should also check your credit score regularly online.
The fees that you may have to pay to progress with your application would normally be:
Right to Buy Scheme in Middlesbrough was not brought in for the intention for tenants to profit from it. You must reside within a property for a certain number of years before you’re able to sell it. If for any reason the property is sold within the set time period then a penalty will be enforced. This is expressed as a percentage of the discount that you benefitted from in the first place.
Not all tenants within council properties exercise the advantages of having a Right to Buy as some do not want the responsibility that home-ownership brings or knowing they would have to do their own repairs. On the other hand, for the ones that do want to invest in the right to buy scheme, it offers the opportunity for first time homeowners to take their first step onto the property ladder.
The majority of high street mortgages which are on the market are portable. A portable mortgage is simply a mortgage that you are able to move from one property to another without paying a penalty. This works out well if you are considering moving to a new house and are currently in the middle of a fixed rate deal because you can potentially avoid an early repayment charge.
It’s important to remember that not all mortgages are portable. If you are looking for a specialist mortgage in Middlesbrough then a Lender might not have the opportunity to port your mortgage. The best way to find this out is to drop a quick call to your Lender to confirm whether or not this is allowable.
Even with the availability of porting being available, not all customers choose to do so. Some reasons as to why customers don’t port could be due to factors including Lenders not lending the extra money that a person needs to move or that the additional funds will be on a different rate to the one you have on your current deal. Depending on what new new deal you are offered you might decide to overlook the repayment charge and swap to a different lender.
A sub-account will be created onto your mortgage when you port your mortgage and the additional monies end up being on a different deal to the original one. This means that although you only have one mortgage and one direct debit, two different rates of interest apply.
Down the line having sub accounts will lead to the different products overlapping which could get annoying. To get them back aligned at some point will mean one of the sub-accounts having to go onto the lenders’ standard variable rate for a period of time.
We can offer mortgage advice when it comes to porting mortgages. If you are moving house and dealing with a buy to let mortgage in Middlesbrough or require support with self employed mortgage advice in Middlesbrough, booking a free appointment with one of our dedicated mortgage advisors can help explore your options.
The Financial Conduct Authority does not regulate some types of buy to let or commercial mortgages.