When buying a new build property, you may be an investor who wants to purchase property to let out to tenants.
Over the next few years there will be updated requirements where a property is needed to meet better energy performance rating. Buying a New Build could make this an easier process for you.
Buy To Let
If you’re planning to purchase a property to rent out for profit, then you’ll need a Buy to Let (Buy to Let) mortgage. It’s illegal to rent out your home if you have a standard residential mortgage without consent from your lender, but it is sometimes possible to convert your mortgage type.
If you plan to apply for a Buy to Let mortgage, you should be ready to be subjected to additional acceptance criteria to a residential mortgage application. Whilst the exact criteria will vary slightly from lender to lender, it’s very likely that you will:
- Need to own a residential property (a mortgage is fine, it doesn’t need to be outright)
- Have a salary of at least £25,000 (Not all lenders have a minimum, but some do)
- Maintain a good credit score
- Need to repay the mortgage fully between the ages of 70-75
Most Buy to Let mortgages are arranged as interest only, rather than repayment. The interest rates are higher than they are for other types of mortgage and you’ll need a minimum deposit of 25%. You’ll also need to fit criteria for affordability based on the monthly rental payment.
It’s important to note that, much like you can’t rent out a residentially mortgaged property, you cannot live in a Buy to Let mortgaged property. Also, not all Buy to Let mortgages will be regulated by the Financial Conduct
Authority (FCA). Examples for BTL Mortgages that are covered by The Financial Conduct Authority include purchasing the property with the sole intention to let it to close family members, accidental landlords and Consumer Buy to Lets Before you make a final decision about entering the Buy to Let property market, you should be aware of the additional tax implications incurred:
- 3% higher stamp duty will be due on your Buy to Let property than on residential properties
- Income tax is payable on both your rental income and any profits from the sale of your property, should you sell it
- Capital gains tax is payable when you sell the property
With regards to the income tax payable on rental income, you are entitled to tax relief on certain aspects of the properties upkeep. For example; property repairs, letting agent fees and council tax. You should also take into consideration, however, that the additional income will affect your overall tax band too. We advise you to always seek advice from a tax specialist.
Speak to an expert
We will work at times that suit you and your family, carrying out appointments via video call, telephone or email, giving you the benefit of first class service, around your own schedule, and in the comfort of your own home. So let us handle your mortgage today and find out how well we can look after you, The Mortgage Mum way!
Limited Company Buy To Let
A Limited Company Buy to Let Mortgage is where you have a Buy to Let Mortgage which is under a Limited Company.
There can be tax advantages to a Limited Company Buy to Let, however we would always strongly recommend you seek advice from a tax specialist where this area is concerned to ensure that it is the right thing for you.
Lenders will have differing criteria and finding the right mortgage for someone on a Limited Company Buy to Let basis can be more complex and time consuming; using a broker will ensure that you have access to a wider range of deals and find the one that is most suitable.
Why choose The Mortgage Mum?
Our Nationwide team of experienced mortgage brokers have dealt with a variety of new build cases for investors.
We know exactly what lenders need, and we’ll take care of all the hard work of navigating the buy-to-let mortgage market for you, so you don’t have to!
With the launch of our new specialist team, we can also look at all sorts of options on your behalf!