Buy-to-Let Mortgages

Our research process aims to aid your UK property purchase.

Looking for an opportunity to diversify your investment portfolio? Cherry Mortgage & Finance can help you apply for a buy to let mortgage to invest in properties in the UK. Most high-street lenders carry out credit searches and identity checks on potential mortgagors, but as many of these checks are automated, expats can easily fail the scoring process if they aren't on the electoral roll, don't have a UK address or landline or do not use UK credit facilities.

Lenders who are actively lending in the expat market tend to look at cases individually and a broker can help to match borrowers to lenders so, despite obvious difficulties with credit scoring applicants who do not reside in the UK and non-standard living arrangements, we have access to over 40 lenders who can potentially assist you whether you are employed, self employed or even retired.

Recent Regulatory changes have affected the buy-to-let mortgage market. You will hear of lenders 'stress-testing' an application. Rental income is an important factor when determining the ability of buy-to-let landlords to service their debt, and many lenders now require the 145% of mortgage payment to be covered by the rental, at a rate of 5.5% (irrespective of the actual pay rate). There are many lenders that use a more detailed assessment of affordability, where they will assess (i) all the costs associated with renting out the property where the landlord is responsible for payment, (ii) any tax liability associated with the property and (iii) where personal income is being used to support the rent, the lender will need to take into account other factors such as personal income taxation, insurance payments, credit commitments, committed expenditure, essential expenditure and living costs.

The Mortgage Credit Directive (MCD) is a piece of EU legislation that seeks to bring together regulation of the property market, across the EU. The rules came into force in March 2016 and, with particular reference to buy-to-Let mortgages, they provide a distinction between those who are 'accidental landlords' and may need consumer protection and those who are professionals and purchase properties for the sole purposes of investment i.e. the 'business' of buy-to-let. The definition of an accidental landlord includes anyone who has inherited a property that is let out, or who plans to rent out a home they previously lived in. This is because under the MCD they will be deemed a consumer rather than a professional buy-to-let borrower. There are still some lenders offering consumer buy-to-let mortgages to expats.

The maximum loan for any buy-to-let mortgage you will be able to achieve if you live overseas will be 75% of the property value, with additional options (and sometimes better rates) becoming available for applicants with larger deposits. Also, options to borrow less than £100,000 are fairly limited; however we aim to research the market for you and provide you with the most suitable solution to enable you to purchase investment property here in the UK. Download our handy guide here or contact us today to see how we can help you.

 

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