Buy-To-Let Mortgages

If you’re planning to stay in your current home, you’d need a residential mortgage. However, if you’re considering renting out your current place and buying a new home to live in, this could be an option for you! There are some extra costs involved, so let us help you crunch the numbers to see if it’s the right move.

Most lenders determine your borrowing capacity based on the potential rental income of the property. They apply their own stress tests, which may factor in your income tax bracket, to calculate the maximum loan amount. Other lenders may use you earned income towards affordability too. Since this can vary widely between lenders, working with an experienced broker is essential to help you find the right lender and secure the best deal.

For a buy-to-let mortgage, you’ll usually need to put down a deposit of 15-25%. Keep in mind that interest rates, costs, and arrangement fees tend to also be higher than with standard residential mortgages.

Yes! A limited company can take out a buy-to-let mortgage, as long as it’s structured in one of two ways:

1. Special Purpose Vehicle (SPV): This type of company is set up specifically for purchasing, owning, or managing buy-to-let properties. To qualify, your company should have one of the following SIC codes: 68100, 68201, 68209, or 68320. You can easily check this on the Companies House register.
2. Trading Company: This would typically be an existing company that wants to invest in property or expand its current asset portfolio.

If you’re unsure whether to buy property in your own name or under your limited company, it’s a good idea to consult with a qualified tax adviser to understand how it might affect your Capital Gains Tax and Income Tax. Once you’re confident about the best option for you, The Mortgage Pod is here to help you find the best mortgage deals.