Top Tips for Securing the Best Buy-to-Let Mortgage Deal

So you want to take a gander into the often money-making property investment field. Or perhaps you were talking to Gary the “investment bro” and he has sparked your interest in expanding your portfolio.

This is a noble and worthwhile desire and a buy-to-let mortgage is probably a great place to start. However, buy-to-let mortgages require a certain level of business savvy to get the best deals.

Let’s help you with that – shall we?

Factors to Consider: What to Look Out for and Prepare

Start by Shopping Around

Avoid saying “yes” to the first deal. There can be a huge variation in interest rates and terms between lenders. This means that you can always find a better deal. So it’s worth shopping around. Compare loans on mortgage price comparison websites to help you get the best deal.

Specialist Lenders

Most people just apply to their high street bank. But, specialist lenders are a good option too. They are especially great for people with complex needs. Many can offer you loans tailored to your exact needs, budget and circumstances.

Understanding Mortgage Types

Different types of mortgages exist for buy-to-let properties:

Fixed-rate mortgages maintain the same rate in the entire duration of your loan.

Rates go up or down in variable mortgages. This means you pay different amounts every month.

On the other hand, tracker mortgages set the rate around the Bank of England’s base rate.

You can find a variety of other mortgage types. The type you go for depends on your personal circumstances. You also want to consider the type of property you are purchasing, and the amount of rent you are going to ask people to pay you.

A fixed-rate is a good idea if you want to protect yourself against rate hikes, for instance. But, if you think the base rate is going to fall, a tracker deal should save you money.

The Importance of Your Credit Score

In the good old US of A your credit score is like the ghost of your past and in this case they could be casper the friendly ghost of one of those ghosts from Friday the 13th and you certainly do not want the latter.

Your credit score must be impeccable if you want the best buy-to-Let mortgage.

Present a Strong Application

As part of the process, your lender will review the state of finances. They will also consider the likely income you will generate from the property you are buying.

Given all this, you might want to show proof of rental income: ensuring that documentation is made available giving details on the likely monthly rent. It will put buyers more at ease if they know the rent received will at least pay the monthly mortgage payment.

Stay in credit: don’t take out any loans without discussing this with your mortgage advisor, and make sure your bank balance goes up every month for at least three months prior to your application.

Larger Deposit

The more the deposit you have, the stronger your mortgage offer. Buy to let mortgages generally ask for a greater deposit than most residential applications. You can expect around 25% down.

Improving Rental Yield

Your rental yield is going to be higher than the average. You can demonstrate this by rental income vs mortgage borrowing. This could soothe the lender who sees you as a higher risk.

Portfolio Lending

Often buy to let mortgage providers let you to apply for multiple properties with a buy to let mortgage in 1 application – now this could benefit in multiple ways for an application.

Negotiate Terms

The rule is to never take the 1st offer. Sometimes drops in small percentages look irrelevant but the monetary value of this saving can be huge. The smallest change can even be a significant amount over a 30-year mortgage!

This is where a mortgage advisor comes into play, especially for newbies. They help you identify good terms and avoid unfair ones.

The Role of Mortgage Brokers

Seek specialist advice from a buy to let mortgage advisor. If you are not a buy to let beginner then a good buy to let broker can save you from a bad deal! This could be the difference between money and not going into your 1st buy blind. Of course, Brokers have access to deals that are not available to the public.

Opting for a broker instead of doing things yourself comes with many benefits too. Apart from saving, they make the entire process a success. They know what documents you need and how to boost your likelihood of getting a good deal. They also know which lenders to avoid!

Get the Best Buy to Let Mortgage Deal Today

The best mortgage is not always the mortgage rate. Other factors need to be considered for the best deals. From credit score to your application, be prepared before you take the leap.

Don’t forget to work on other key factors of this process too. Whether boosting your rental yield or securing a higher deposit. No matter what the case, if you have a plan of action on investments and choose a specialist broker, you are a long way ahead of most first time investors.