24 January 2022
Get the best out of your BTL mortgage
Many fixed mortgage deals will be approaching the end of their term this October, so it’s a good idea to review your buy-to-let mortgage.
With interest rates still at low levels and demand for rental properties increasing around the country, investing in a buy-to-let (BTL) is a popular choice for many.
Buy-to-let basics
A BTL mortgage is a specific type of product for those who want to buy a property with the intention of renting it. Because of this, there are different terms and rules around a BTL mortgage (compared to a regular mortgage for a property the buyer intends to live in.)
- With a BTL mortgage, the anticipated rental income is taken into account when the lender calculates how much you can borrow.
- A BTL mortgage could suit investors with enough equity to put down a deposit of at least 20% of the value of the property (but some lenders could require up to 40%.)
- Your credit record is closely scrutinised with a BTL mortgage, as with a regular mortgage application.
- Interest rates for BTL mortgages are usually higher than a regular mortgage.
Things to remember
If you have a BTL mortgage already and its fixed interest rate term is coming to an end, you may be thinking about switching products or providers to gain a better deal.
Here are some other things to look out for:
- Examine all of your options into the type of product to suit your investment going forward. A financial adviser is best placed to help you with this.
- Don’t forget to research any fees and charges around changing your product too, as these could be higher than you expect.
- When changing products, you may be asked about your property’s rental income history in order to assure any new lenders that you are able to keep up with mortgage payments.
- Show that you have sufficient savings to cover any gaps in rental periods when your property could be unoccupied.
- For your own peace of mind, having a cushion of savings available to cover any essential repairs is important.
If you are looking to remortgage your BTL property or are thinking about transferring your mortgage to a different provider, our advisers can help you find a product that best suits you.
Some buy to let mortgages are not regulated by the Financial Conduct Authority.
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE
Key takeaways:
- Many fixed mortgage deals will be approaching the end of their term this October, so it’s a good idea to review your BTL mortgage.
- BTL mortgages come with different terms and rules than a regular mortgage.
It’s important to research all of your options when changing BTL mortgage products. A financial adviser is best placed to help you with this.
We offer initial fee free, no obligation advice, so just call us for a chat and let us help you to get the most from your property investment.
The cost of moving home Buying a home comes with extra costs and fees you need to be aware of – from securing your mortgage to booking the removal van. Whether you’re a first-time buyer, downsizing or moving to your dream family home, it’s an exciting – and busy – time. It also comes with costs that could take you by surprise, so here’s a look at the ones you’re likely to come across and how we can help you through the journey.
Tips to finding your first home Searching for your first home can be an overwhelming experience, but when it’s the biggest purchase of your life, you need to ensure that it’s right for you. There are so many things to consider, so to help you with one of the biggest decisions in your life, we have drawn up some helpful tips and guidance when finding your first home.
The Bank of England has raised the Base Rate 0.25% to 4.25%. Did you know more than 1.4 million households coming to the end of a fixed rate mortgage in the UK are facing interest rate rises when they remortgage in 2023?
Let’s start at the beginning - what exactly is home insurance? Home insurance financially protects your home against damage or theft but is typically split into two parts – buildings and contents. Buildings insurance – this covers the building itself, including walls, floors, doors, windows and the roof. It also covers permanent fixtures such as baths, toilets, fitted kitchens and even wallpaper. Contents insurance – This typically covers anything that can be taken with you if you move e.g. kitchen appliances, furniture and valuables. Not all home insurance is equal As Alex and Megan discovered to their cost, not all home insurance is equal. Although tempting to simply go with the cheapest option, it’s always best to check the details of any policy you’re considering seeing exactly what’s included. For example, some buildings insurance covers garages, greenhouses and garden sheds but some policies don’t. It's also a good idea to check for exclusions. You may find some insurers won’t pay out for anything considered to be the result of general wear and tear or damage that happens over time, such as damp or rot. Meanwhile, contents insurance generally has a single-item limit, meaning high-value possessions may need to be named separately. You may also have to pay extra to cover belongings when they are taken outside your home.
Why your mortgage term matters With increases in the cost of living impacting on many household budgets, the cost of your monthly mortgage payment continues to be important. On a capital repayment mortgage, the quicker you pay off your balance, the bigger your monthly payments will be. By having a longer term, you may benefit from a lower monthly payment, but you will also pay more interest. Whether you’re taking out a new mortgage to buy your first home or have had a mortgage for several years and want to remortgage, it’s important to consider how soon you want to be ‘mortgage free’. You should weigh this up against a mortgage term that makes your monthly repayments affordable. We can help guide you through all your mortgage options including advice on the term of your mortgage.
10 ways to cut your carbon footprint and reduce your energy bills Reducing your energy consumption can be a great way to cut your carbon footprint, lessening your personal impact on the environment and potentially helping to limit the devastating effects of climate change. As living costs and the price of energy are soaring, taking action to lessen your usage can also be an effective tool to save money on your bills. 1 in 8 UK consumers think they’re already doing enough Interestingly, when compared globally, the UK has the highest proportion of consumers – 17% – who think they already do enough to prevent climate change, according to a MarketScreener report. However, by better understanding your consumption habits, you might realise there’s more you can do. According to the report, Jaap Ham, associate professor at the Eindhoven University of Technology, argues that our mindset is the biggest problem to tackle when trying to take action to curb energy consumption. Echoing this, Schneider Electric’s vice-president of home and distribution, Nico van der Merwe, says that “it is encouraging to see the public recognise that real change starts at home”. He puts emphasis on the use of smart tools to help consumers understand their own usage, allowing you to take targeted action from there. With 8 in 10 UK consumers believing that climate change will lead to higher energy bills, conditioning yourself to make the most of your energy consumption could kill two birds with one stone – saving money and the planet.
Could remortgaging help you beat the cost-of-living crisis? Practically every penny of Mike’s monthly salary is accounted for so, as the cost-of-living crisis starts to bite, he’s worried about making ends meet. He’s started shopping around for cheaper deals on his broadband, mobile-phone contract, and car insurance, and he’s also cancelled his gym membership and a couple of his TV subscriptions. But he’s overlooked the bill offering the largest potential saving – his mortgage. What is remortgaging? Remortgaging involves taking out a new mortgage on a property you’ve already bought. You might do this to replace an existing mortgage deal or to borrow money against your home. Is remortgaging right for Mike? After Mike’s last mortgage came to an end, he didn’t look for a new deal so he was switched onto his lender’s standard variable rate (SVR). An SVR is usually much higher than fixed and tracker rates, and it can go up at any time. Research by Habito found 27% of mortgage holders in the UK are currently on their lender’s SVR, and they worked out - on an average mortgage - this translates to an extra £340 a month. This means Mike could almost certainly benefit from remortgaging.
Lindsay and Sam have just found out they’re expecting their first baby. Although they’re excited at the prospect of starting a family, it’s come as a bit of a surprise and their current living situation is far from ideal. They’ve been staying with Lindsay’s dad in his two-bedroomed terrace for just over a year while they save up a deposit for their first house . The lack of space and privacy has proved challenging to say the least. Adding a baby into the mix seems like a terrible idea. On the positive side, Lindsay and Sam now have a decent deposit to put down on a house. Despite this, friends have warned the couple they’ve no chance of getting a mortgage due to their working situation. Sam is a self-employed roofer and he’s pretty successful. However, he’s only been working for himself for two years. His friends have told him, he’ll need at least three years of accounts before a lender will go anywhere near him. They say any mortgage the couple can get will be based on Lindsay’s income alone. Lindsay works as a hairdresser and her salary is nowhere near enough to secure the kind of mortgage they’re hoping for. What can Lindsay and Sam do?
Sylvia and Jim met at university and married within months of graduating. After their honeymoon, Sylvia was delighted to land a job in publishing, while Jim put his gift of the gab to good use in a sales role. A year after tying the knot, they bought a house. The couple were looking forward to spending the first Christmas in their own home and had a trip to Iceland planned to see in the new year. However, on his way home from work on Christmas Eve, Jim was involved in a car accident and suffered life-changing injuries. The future suddenly looked very different. Jim was unable to work following the accident and Sylvia left her job to become his full-time carer. They could no longer afford to pay the mortgage and lost the house. Hopefully, you’ll never find yourself in a situation similar to Sylvia and Jim. However, when you take out a mortgage - as well as insuring the building and contents - it may be worth thinking about getting protection insurance to provide financial security should you or your partner become critically ill or die. What is protection insurance? There are three main types of protection insurance:
It seems even the experts are divided amongst their opinions on the future outlook for the U.K. property industry, with some predicting a slow-down and fall in seemingly ever increasing property prices
Nepali Mortgages is a trading style of James Paul Beadell which is an appointed representative of The Openwork Partnership, a trading style of Openwork Limited which is authorised and regulated by the Financial Conduct Authority.
The information on this website is for use of residents of the United Kingdom only. No representations are made as to whether the information is applicable or available in any other country which may have access to it.
Approved by the Openwork Partnership on 28th May 2024
