Frequently asked questions

1. What is the difference between a buy to let mortgage and the mortgage I have arranged on my home?
2. How long will it take to receive a mortgage offer from a lender?
3. What does LTV mean?
4. What is the maximum 'Loan to Value' for a buy to let mortgage?
5. What does APR mean?
6. How is the rental assessment undertaken?
7. What is conveyancing?
8. Is it compulsory to take out life cover on a buy to let mortgage?
9. What costs are involved?

What is the difference between a buy to let mortgage and the mortgage I have arranged on my home?

There are many differences between a buy to let mortgage and a residential mortgage. The buy to let mortgage advance is generally determined by the rental income you are likely to achieve from the investment property; not your earned income. A buy to let property purchase is regarded as an investment. Most buy to let mortgages are not regulated by the Financial Services Authority.

How long will it take to receive a mortgage offer from a lender?

We aim to get a mortgage offer of loan to you and your solicitor within 10 working days of receipt your completed application and supporting documents. Please note it is possible for us to obtain an offer within 5 days with some lenders.

What does LTV mean?

Loan to Value. This is the mortgage amount expressed as a percentage of the value of the property or the price you are paying for the property. For example, an £80,000 mortgage secured on a property worth £100,000 would be expressed as 80% LTV.

What is the maximum 'Loan to Value' for a buy to let mortgage?

Most Lenders will offer a loan equivalent to 85% of the value of the property which means you would normally need to find a deposit of 15%. However, higher loan amounts can be achieved, in some cases up to 90%. Clients purchasing properties with discounts may only need to find a deposit equivalent to 5% of the property's market value. Please contact us for further details.

What does APR mean?

Annual Percentage Rate. This is a way of comparing the true cost of borrowing of one loan with another. The APR takes into consideration most of the up front costs associated with a particular mortgage product e.g. the lenders Arrangement fees.

How is the rental assessment undertaken?

Usually, a surveyor will visit the property and talk to local letting/estate agents before he comments on an achievable monthly rental income figure. Mortgage lenders have different rental cover requirements. At the very least, the monthly rental income should cover the interest only proportion of the monthly mortgage payment. Lenders will request that property valuers quote an unfurnished figure in their report. The following are examples of lenders rental cover criteria where a valuer has confirmed a monthly rental income of £450 for a property:

• At 100% rental cover: Rental Income must be at least £450 per month
• At 110% rental cover: Rental Income must be at least £495 per month
• At 125% rental cover: Rental Income must be at least £563 per month

What is conveyancing?

Your nominated solicitor will take care of the legal process involved in buying and selling a property. This is known as conveyancing.

Is it compulsory to take out life cover on a buy to let mortgage?

Most lenders will not insist that life cover is a condition of the mortgage.

What costs are involved?

Initial costs will normally include:

• Property valuation fee: Made payable to the lender. The amount will vary and is usually dependant on purchase price/property value.
• Booking/Admin fee: Payable to the lender when we submit your application. Not all lenders products will attract a charge.
• Broker fee: Payable to ourselves when the lender issues a mortgage offer of loan.
• Legal fees: Payable to your solicitor prior to or on completion of a purchase or re-mortgage for his professional time, disbursements, VAT and Stamp Duty.

Ongoing costs

• Property maintenance: Costs associated with the upkeep of the property.
• Letting Agent's fees: Letting Agents typically charge around 15% of the monthly rent for a full management service.
• Annual Ground Rent and Service Charges: Applicable to leasehold properties. Generally, the costs associated with external maintenance and buildings insurance are covered by these fees.
• Landlord insurance: Covers the cost associated with the eviction of tenants in the event of non-payment to cover rental voids. Some lenders provide this free of charge.
• Property insurance: Buildings insurance and contents insurance.
• Furnishings: Purchasing furniture and setting aside a provision for wear and tear. If the property is to be let furnished, make sure your insurance policy provides protection for the contents.
• Gas / electrical appliances: Cost of maintaining appliances and ensuring they comply with safety regulations.