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.