Buy to Let Mortgages

Can I get a mortgage…? Family Buy to Lets (Regulated Buy to Lets) and Consumer Buy to Lets

Types of Buy to Let Mortgage

There are currently 3 different types of Buy to Let Mortgages from a regulatory point of view. Below there is some information on each one of them.

  • Unregulated Buy to Let

This is the most common type and the one most people think of when considering Buy to Let Mortgages.  They are for landlords who are buying or who have previously bought a property with the sole intention of renting it out to people not related to them.

They are not regulated by the Financial Conduct Authority.

Please see our blogs on Buy to Let Mortgages for more information:

  • Regulated Buy to Let (Family Buy to Let)

This is for properties that will be let to a family member. An example would be buying a property for a child and their friends to live in and rent to while they are at University.

They are regulated by the Financial Conduct Authority.

How do Regulated Buy to Let Mortgages Work?

Regulated Buy to Let’s are still a mortgage like any other type of mortgage so they will require securing on a property and for you to have a deposit.

The market for Regulated Buy to Lets is much smaller than for other types of lending as it is a much more specialised area. As such, there are less lenders that operate them; getting advice to get the right one can be crucial.

Most Regulated Buy to Let mortgages on offer will want you to have at least a 25% deposit, although there are some lenders that can look at these with lower deposit requirements.

Lenders will also assess affordability on Regulated Buy to Let mortgages differently than to Unregulated Buy to Let mortgages. This is because, in most cases, affordability will be based on the income and expenditure of the customer rather than on the rental income that could be received.

If you need advice on Regulated Buy to Let mortgages, please get in touch today to see how we can help. (Click here).

  • Consumer Buy to Let (Accidental Buy to Lets)

This type of mortgage is for customers who accidentally become landlords. They differ from Unregulated Buy to Let mortgages discussed above as they are designed for people who have obtained a rental property not solely from a commercial purpose. An example could be those who have inherited a property and now wish to rent it out. Another example is for those who want to move to a new house and rent out the property they are currently living in, instead of selling it.

How do Consumer Buy to Let Mortgages Work?

Consumer Buy to Let mortgages work in much the same way as Unregulated Buy to Let mortgages, the difference is that greater regulation applies around them. This means, there are slightly fewer lenders who will look at this type of mortgage.

You will still need a deposit to access them and to get many of the deals, this is usually at least 25%. However, there still is a market for lower deposit Consumer Buy to Let mortgages.

For the most part, affordability will be based on the rental income you receive or are likely to receive. The lenders will conduct calculations on what we call the rental coverage of the property. Rental coverage calculations vary from lender to lender, so getting it right is important.

If you need advice on Consumer Buy to Let mortgages, please get in touch today to see how we can help. (Click here).

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