BTL FAQ's
- 1. St Georges Finance independent funding specialists WITH ACCESS TO THE ENTIRE MARKET info@stgeorgesfinance.co.uk | 01737 652 122 | www.stgeorgesfinance.co.uk St Georges Finance 10 TopQuestions every Buy to Let borrower needs to know
- 2. info@stgeorgesfinance.co.uk | 01737 652 122 | www.stgeorgesfinance.co.uk 2 3 Is funding available for flats above commercial units?Yes, we have lenders who will lend up to 80% of the proper- ty’s value on new build flats above commercial units and 75% on older properties. 1 Is it possible to get a mortgage on a new build property? Yes we have lenders who will lend up to 80% of the property’s value, on both new build flats and houses. Can I get finance for an HMO property? HMO stands for a House in Multiple Occupation and generally refers to either a house split into bedsits, a house or flatshare where each tenant has their own tenancy agreement or students living in shared accommodation. There are specialist lenders who are happy to lend on HMO’s, although they will typically limit this to properties with a maximum of eight beds. The lender will also insist that all the necessary consents must be in place (see www.gov.uk/private-renting/hous- es-in-multiple-occupation for further details) before lending.
- 3. info@stgeorgesfinance.co.uk | 01737 652 122 | www.stgeorgesfinance.co.uk Can I raise Buy to Let finance for a Limited Company?Yes we have lenders that are happy to provide finance to Limited Company borrowers for up to 25 years, with interest rates from 2.99% above bank base rate. My income is below £25K is a Buy to Let still a possibility? Yes some of the cheapest lenders in the market have no minimum income requirements. The main thing these lenders want to know is that you have enough income to cover your outgoings without needing to use the rental income from the property. As long as you can answer yes to this, then there are lenders who will be able to help you. 5 6 4 Is funding available on ex-local authority properties? Many lenders will not lend against ex-local authority properties as they are concerned that they are difficult to sell or refinance. Other lenders do however take a much more relaxed view and are happy to lend as long as the valuer is happy with the property. For example we recently completed on a mortgage for a client who purchased an ex-local authority concrete build property.
- 4. info@stgeorgesfinance.co.uk | 01737 652 122 | www.stgeorgesfinance.co.uk 8 How much can I borrow? Lenders use 2 key measures in calculating how much they will lend, the loan to value (ltv) and the level of interest cover. Loan to Value Lenders will tend to have a level they are happy to go up to on a property value. Typically this is up to 75% of the value of the property, for example, a £150,000 loan on a £200,000 property. Some lenders will however advance up to 85% of the value of the property. The relationship between the loan amount and the property value is known as the loan to value ratio (ltv). The higher the loan to value, the higher the perceived risk to the lender and typically therefore the higher the interest rate. Interest Cover All Buy to Let lenders are keen to ensure that the rental income from your property is sufficient to cover the proposed mortgage interest payments and leave some spare to cover other costs such as maintenance, insurance and periods when the property is not occupied. Most Buy to Let lenders want the gross rental income from the property to cover the mortgage interest payments by 125% at either the current interest rate on the mortgage or a stressed interest rate, which takes into account some element of future interest rate rises. Most lenders use a stressed interest rate of between 5% and 6% p.a. There are however some specialist lenders that will lend slightly more than this where either the borrower has a very strong financial profile or where the borrower has a larger portfolio and the property is in a very good area. 7 I need to refurbish the property before it is suitable to let, is this possible? There are a select amount of lenders who can consider this on a retention basis, or alternatively we have a bridge to let option which allows you to purchase, refurbish and then switch on to a buy to let with the same lender. Even better news is the fact that this can be done with no product fees.
- 5. info@stgeorgesfinance.co.uk | 01737 652 122 | www.stgeorgesfinance.co.uk 10 9 How long will it take to have the funds in place?This is always a hard one to answer as there are so many variables involved e.g. getting valuations booked in, lenders individual turnaround times, speed of your solicitor etc. But to give you an idea we recently took a deal from full mortgage application through to offer within 7 working days. Excellent service received from St Georges Finance and I would definitely recommend using them. They produced a great result and did everything I required. They delivered products that suited my needs and communicated frequently which is a big help when you are fighting timescales. I would happily recommend St Georges Commercial Finance to anyone. J Lawrence D&J Property Group Exce What is the difference between Bank Base Rate, LIBOR and a Standard Variable Rate? A Standard Variable Rate (SVR) is the rate of interest at which a lender's standard mortgage is set. Although lenders normally change their SVR as a result of The Bank of England Base Rate changing, they are not obliged to do so. However, many lenders will charge an interest rate linked to either Bank Base rate (BBR) or LIBOR. For example, if BBR is 0.5% and a lender charges interest at “3% above BBR”, then the interest rate would be 3.5%. BBR is the rate of interest that the Bank of England charges banks for borrowing money. Any changes in BBR are widely reported in the press. LIBOR is the “London Interbank Offer Rate”. This is the rate at which a bank may lend or borrow from other banks in London. This rate can change from day to day. Most lenders use the 3 month LIBOR rart which can be checked online.
- 6. Give us a call on 01737 652 122 if you’d like to discuss this in more detail. How do I know I’m getting the best deal? St Georges Finance There’s no obligation and no strings! YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY DEBT SECURED ON IT Trying to work out the true cost of a mortgages taking into account introductory interest rates, differing arrangement fees, administration fees, reversionary interest rates and valuation fees can be daunting. Because we have a specialist mortgage sourcing systems we can give you comparisons of the actual mortgage costs over a number of different periods e.g. 2,3 and 5 years to make sure you have all the information to make the right decisions. Because we’re independent we have access to the entire market, including many market leading lenders that do not deal direct with the public. As the Buy to Let mortgage market constantly changes we issue a monthly update to let our clients know the best Buy to Let deals available. If you would like to receive this, please click below. To answer any of your other questions or to find out how we can help you find the right buy-to-let mortgage, call us on 01737 652 122, or email us at info@stgeorgesfinance.com Click Here To Receive Our Monthly Best Buy Newsletter