The process of obtaining a buy-to-let mortgage can be a lengthy one, with the average time to receive an offer ranging from four to six weeks. This is because mortgage providers consider purchase-to-rent mortgages to pose a greater risk than residential mortgages, as landlords often have problems with collecting rent and it is unlikely that their property will be occupied constantly. The second common cause of delay is the failure to promptly provide supporting documentation, such as proof of income and identification. When you buy a property as an investment, you won't be able to finance your purchase with a normal residential mortgage.
Instead, you'll need a specialized buy-to-rent mortgage. Most buy-to-rent mortgages in the UK only pay interest, and the landlord pays the monthly interest with rental income. The completion would normally take place in another four weeks, assuming that there are no setbacks or complications. I want to warn real estate investors that less than half of the lenders who are actively lending in the purchase-to-rent sector at this time are able to reach an agreement within the usual industry average.
Most lenders continue to quote offer request periods of about three weeks, but the reality is that these deadlines are simply not being met. To close transactions relatively quickly, you should avoid lenders who are being late. In the future, BTL mortgage providers will generally be happy to lend until age 75, but some may reach 85 or have no maximum limit. Your eligibility will be re-evaluated, as your circumstances may have changed and, therefore, your mortgage offer could change depending on this.
Basically, this involves analyzing the numbers and comparing the rental income forecast you've provided with the mortgage rate you qualify for. For larger purchase-to-rent mortgages, it might be more cost-effective to choose a product that has no fees or that has a fixed rate. The amount you will pay will depend on the complexity of the purchase-to-rent mortgage and the type of product you purchase. To assess whether a rental purchase is financially viable and when applying for a purchase-to-rent mortgage, you must know the rental performance of a property.
A rental statement is the difference between the rental income generated by your property and the amount of interest due on your mortgage each month, expressed as a percentage. Sometimes you can pay a minimum deposit of 20% for a purchase-to-rent mortgage, although some of the best mortgage rates available require a deposit of up to 40%. We offer a free brokerage service that will take into account your investment needs, circumstances and objectives and will connect you with your ideal mortgage advisor. A mortgage offer will typically last about six months, and remortgage offers typically last about three months.
If you've been paying a residential mortgage for a while, you may be able to remortgage to free up capital and use it to buy your first rental purchase. In this case, it would be a good idea to rethink the amount of the mortgage you would request, how much you can afford and what is the best way to budget in order to be able to go through the mortgage application process again and hopefully get a more satisfactory result.
