The Financial Conduct Authority does not regulate some types of commercial or buy to let mortgages in Liverpool.
Exploring the realm of mortgages offers a diverse array of paths for property purchasers. Whether it’s the initial stride of first time homebuyers onto the property ladder, homeowners seeking to remortgage, or those venturing into holiday lets and HMOs, the possibilities are extensive.
A specific domain within mortgages frequently encountered in customer interactions is the realm of buy to let mortgages in Liverpool.
A buy to let property in Liverpool is classified as an investment property, designed exclusively for profit rather than personal residence. Individuals with previous private renting experiences likely resided in a property financed through a buy to let mortgage.
To qualify as a buy to let in Liverpool, the property must be intentionally mortgaged for such purposes, with the landlord clearly expressing their intent to rent it out. The monthly rent from tenants should ideally cover the mortgage costs, with a surplus.
Several factors determine eligibility for a buy to let mortgage in Liverpool. These include the property type, age (typically between 21 and 75, with limited options for lenders extending beyond 75), and buy to let landlord experience.
Mortgage lenders primarily assess affordability, minimum deposit requirements, and the current credit score status.
Demonstrating eligibility for a buy to let mortgage in Liverpool necessitates proving affordability to the lender. Most lenders base affordability on projected rental income, indicating the amount tenants should pay to cover monthly mortgage payments and additional funds.
Some lenders may also impose a minimum income requirement, usually around £25,000. Expert mortgage brokers, like our team at Liverpoolmoneyman, can assist in finding suitable lenders and deals.
As with most purchases, a deposit is a prerequisite for a buy to let mortgage in Liverpool, typically around 20-25% of the property value.
A higher deposit reduces the lender’s risk, potentially leading to better interest rates with a 75-80% loan-to-value ratio. High-risk purchases, such as those with bad credit, might require an even larger deposit.
Eligibility for a buy to let mortgage in Liverpool may exist for individuals with low credit scores or a history of bad credit. However, the choice of lenders is limited, with considerations for the severity and reasons behind the bad credit. A larger deposit might be necessary in such cases.
Before applying for a buy to let mortgage in Liverpool, finding a suitable property is the initial step. A free mortgage appointment with an expert buy to let mortgage advisor in Liverpool helps determine eligibility, identify optimal deals, and secure a mortgage agreement in principle.
Buy to let investors often opt for interest-only mortgages, paying only the interest monthly, reducing monthly expenses. The capital balance becomes payable at the term’s end, typically cleared through property sale or remortgaging to a repayment mortgage.
While interest-only is popular, repayment mortgages are also viable, increasing monthly payments but allowing equity growth.
Stress-testing projected rental income is crucial for a buy to let mortgage application. While the amount you want to borrow may not be limited, lenders often require projected rental income to exceed monthly payments by a specific margin.
Applying for a buy to let mortgage in Liverpool involves providing various documents, including proof of income, deposit, ID, address, bonuses, commission, and tax returns for self-employed applicants.
Existing landlords may need rental income proof, and all documentation ensures a smoother application process.
Costs associated with a buy to let mortgage in Liverpool include deposit, mortgage arrangement fees, application and broker fees, monthly mortgage payments, valuation fees, product fees, mortgage exit fees, solicitors fees, disbursement fees, stamp duty, and potential early repayment charges.
Remortgaging a buy to let in Liverpool is common, allowing landlords to release equity for other property purchases.
Equity in a buy to let property works differently, especially with interest-only mortgages, where only interest decreases. Switching to a repayment mortgage increases monthly payments but allows simultaneous payment of capital and interest.
While options may be limited, it’s possible for first time buyers in Liverpool to secure a buy to let mortgage. A larger deposit is typically required, foregoing benefits like first time buyer stamp duty exemptions.
Becoming a landlord can provide income before securing a residential mortgage. Lenders will assess the second purchase, considering existing mortgage commitments.
As an experienced mortgage broker in Liverpool. We have worked with various buy to let landlords across Liverpool and helped them secure competitive deals for buy to let mortgages in Liverpool.
Our customers who already have an existing property portfolio always ask whether it’s possible to transfer ownership from your name(s), into the name of your limited company.
Firstly, it is essential to know how a mortgage lender will approach purchases from limited companies. There are not many lenders that will accept Ltd Company applications through anything other than an SPV (Special Purpose Vehicle) Company.
An example of this is a company set up expressly to invest in properties like this. When registering your company, your registration will include a SIC (Standard Industrial Classification) Code. You need to be aware of how mortgage lenders approach limited company purchases.
There aren’t many mortgage lenders that accept limited company applications through anything other than an SPV (Special Purpose Vehicle) Company, i.e. a company set up expressly to invest in this type of property.
When you register a company, your registration includes a SIC (Standard Industrial Classification) Code that sets out the business type(s) in which the company will participate. The mortgage lender doesn’t usually accept applications from general trading companies that can trade in other areas.
The SIC codes typically accepted are 68100, 68201, 68209, 68320 but it can vary from lender to lender. To find out more information about SIC Codes, consult the Government website.
Purchasing a Buy to Let property under a limited company comes with both advantages and disadvantages. So for instance, not every mortgage lender will consider applications from an SPV. Preferring to limit their lending to individuals/couples in their name(s).
Therefore, individuals tend to have a wider choice of lenders and products than SPVs. Of those lenders that will lend to an SPV. The mortgage rates offered would typically be higher than those provided to individuals.
On the plus side, in recent years, changes to the way rental income gets taxed have meant that. For many people, the tax advantages generated by SPV make up for any extra interest charges or lack of choice.
The first thing our buy to let mortgage advisors in Liverpool recommending you is when considering whether to buy your property portfolio under the auspices of an SPV is that you get advice from a specialist tax advisor.
They will evaluate how factors, such as your other income sources, and the rate of personal income tax you pay will affect your overall tax status and establish whether individual or SPV ownership is better for you.
As we mentioned before, the main factor in deciding whether to buy under an SPV is your tax position. It is complicated further when determining whether to transfer properties you already own as an individual into company ownership.
There is a slight problem, though, this sort of transaction is not a simple transfer; it’s a change of legal ownership.
The limited company is a separate corporate identity, so the transaction is essentially a purchase by the SPV from you selling as an individual, so you’ll have to account for stamp duty charges, legal costs, and new mortgage valuation charges.
Additionally, you will need to remember that limited companies have running expenses and legal obligations. However, these may get offset by the potential upside of some tax-deductible costs or long-term tax benefits.
Where landlords are looking to increase their property portfolio, it often works out that they continue to hold existing properties in their sole name(s) but purchase any new additions under the company name, thus avoiding all the on-costs of switching.
Having said that, no case is the same, and there may be some circumstances where the switch would be beneficial in the long run, even considering the costs of switching.
Contact us if you are thinking of going down this route, our team of specialist mortgage advisors in Liverpool are here to help you with all of the arrangements, providing you with top quality service.
Most people take out a single mortgage, but there are plenty of reasons why you may want to take out a second mortgage. Here in this article, we will cover some common scenarios our mortgage advisors in Liverpool have come across to why you may require another mortgage:
If you currently have equity in your home and are looking for a second mortgage to release some of this equity, then we can help whether you are looking to release equity to fund another purchase, home improvements or something else.
If you are looking for remortgage advice in Liverpool, we can help explore all of your options. In any case, if you are currently on your lenders’ standard variable rate of interest, we can find a more competitive deal along with releasing your capital. A further advance from your current lender could also be an option here.
Suppose you are looking to help your children or grandchildren onto the property ladder in Liverpool. There are many products out there on the market that could help you achieve this. For a free mortgage consultation and to run through your options, please don’t hesitate to get in touch.
If you are looking for an additional mortgage to purchase an investment property, we can help you through the whole process. Whether you are a first time landlord or portfolio investor, we can offer to buy to let mortgage advice in Liverpool.
Firstly, this is a situation that we come across quite often, usually due to divorce or separations. Whatever your situation, if you are currently named on another mortgage and would like to purchase a new property to live in.