Buy to Let Mortgages

People look at owning properties other than their main residence for many reasons. They may be looking to increase their income through the rent received, or for the capital growth in property prices if they keep the property long term. Others want to move on to a new property, and may not get the price they want for their current property if it was on the market today.

One client was referred to us for specialist buy to let advice. They were looking to raise funds to pass to their children to enable them to either buy their first properties. The parents owned 2 rental properties with no lending on either, so there was equity there. However the parent’s income was an issue.

Whereas buy to let mortgages used to be assessed on the rental income the property would generate, after the credit crunch, most lenders require at least one applicant to have at £25,000 in provable earnings, with rental income not taken into account. These clients were retired, and their cumulative pension income was around £20,000 per year. This would not have passed with the majority of lenders.

However, we found a lender who didn’t require any minimum income for any applicant, as long as they could be classed as experienced landlords. Their criteria for this was that we could prove they had owned and rented out a property for the last 6 months. Land Registry records proved they owned the property, and we provided the last 2 rental agreements showing the rental income being paid to our clients.

The lender was happy to proceed on this basis, the loan was secured against one of the rental properties, and the funds were released to the children, who are have now offered on their own properties.