First Time Landlords
BUY TO LET MORTGAGES FOR FIRST TIME LANDLORDS
Is your first time becoming restrictive?
Being a first time landlord can restrict some mortgage lenders from agreeing a buy to let (BTL) mortgage, just on this basis. Additionally, if you have never owned a property, it’s even more restrictive.
However, there are lenders available who will accept first time buyer AND first time landlord BTL mortgage applications at high street interest rates. Give Vincent Burch a call today! There are a very limited choice of buy to let mortgage lenders for first time landlord and first time buyers.
There are many issues surrounding someone buying their first property as a buy to let. For example, lacking the experience of having a mortgage in the first place. Also, the experience of managing the property and its tenants for the first time.
However, the bigger issue for the mortgage lender is the risk of a mortgagee not adhering to the Mortgage Agreement. Obviously there is always the risk the repayments are not met, but the mortgage lender has assessed this risk during the application.
The increasing risk to the buy to let mortgage lender is what’s called ‘policy abuse’. Today, mortgage regulators requires every residential mortgage to evidence income and affordability. Thorough experience, the lenders face a high risk. A first time buyer landlord may actually be a first time home buyer who’s income cannot support the mortgage advance based on the income multiples.
This concern is heightened now that there is a new EC Directive. Coming into force April 2016, this will regulate these BTL mortgages where the owners have moved into the property.
Buy to let mortgages on properties which are let to a close family member is also classed as a regulated mortgage. As such, they are already covered under the Financial Conduct Authority.