What to consider when looking for a buy to let mortgage in 2016.

Mortgages on buy to let property, are in the majority of cases very similar to residential mortgages. Currently products are not regulated by the FCA, but after March this will change. This will mean that for the smaller scale investor, not deriving their income from rent, it may prove more difficult to get mortgage approval, as products will be subject to increased regulation and affordability checks. 

Prior to regulation assessment has been based on the rent charged, which must be over 125% of the monthly mortgage repayment. After April lenders will also take into account an applicants income, because affordability checks and stress tests will be applied as with a residential mortgage.

Generally speaking, buy to let rates are set higher than residential rates, which makes shopping around the market for the very best deal crucial, if you are to get the most competitive mortgage offer.

A deposit for a buy to let mortgage is usually a minimum of 20%. It is thought that with changes to buy to let in the form of a stamp duty increase, the removal of mortgage tax relief and increased regulation, lenders may start to ask for much larger deposits.

Usually fees charged are quite high too, a percentage of the mortgage advance is usually asked for and fees can be as much as £4,000. It is therefore vital to consider this when choosing a product.

Buy to let rates are currently highly competitive, starting from 2.14% for a 2 year fix for 60% LTV from Virgin with a £1,995 product fee.

If you would like buy to let mortgage advice call us at Deal Direct. We can find you the right mortgage to match your investment needs. While we are mortgage experts we are not authorised or regulated to offer financial advice, and so to work out if property is the right investment for you call an IFA.

Note: not all mortgages for buy to let are regulated by the FCA.

For mortgage advice and a quote call 0800 048 8828.