Buy-to-let mortgage eligibility.
With recent changes to mortgage regulation, eligibility for a buy to let mortgage has changed. The sector is now split between those applicants who would be eligible for a professional mortgage and those eligible for a consumer mortgage.
So what’s the difference? Professional mortgages, which are not regulated by the FCA, are for applicants/landlords who derive their main income from buy-to-let. These are buyers who purchase property solely for the purpose of rental income or property price growth.
You might be asking - isn’t that all landlords? The answer is no, some landlords have fallen into letting property accidentally, perhaps after the death of a loved one they have inherited property. If they need or want to take out a mortgage on the property, they will be subject to consumer buy-to-let mortgage regulation.
What does it mean for consumer BTL applicants? Basically applicants will be subject to the same affordability checks as residential customers, they will need to prove their income to ensure that they can repay their mortgage.
The news isn’t all bad, some lenders are interpreting the new regulations in a way which should make it possible for many landlords to keep on investing.
For instance, we work with lenders who interpret the rules as:
Buy to let mortgage applications from:
- applicants whose intention is to benefit from house price growth
- applicants whose intention is to benefit from rental income
- applicants who are letting to buy
will be treated as normal buy to let and not as consumer buy to let. In addition, their subsequent remortgage applications will also be treated in the same manner.
If you want advice to find out what type of mortgage you are eligible for call us at Deal Direct, we are an independent mortgage broker specialising in the buy-to-let sector.
Please note that while we are regulated by the FCA to offer mortgage advice, we are not regulated to offer general financial advice. If you would like to discuss the suitability of property as an investment, you will need to speak to an independent financial adviser.
For a low rate buy-to-let quote call us on 0800 048 8828.
