Specialised Buy-To-Let Mortgages

Are you interested in purchasing a buy-to-let mortgage so you can make a return on your property investment?

Are you aware of the process but unsure of where to start?

The Lending Channel is here to help! We are experienced buy to let mortgage brokers based in Scotland and have helped many individuals realise their dream of becoming a landlord and letting out a buy-to-let property.

Find out everything you need to know about buy-to-let mortgages in Scotland and get valuable advice from an expert buy-to-let broker by reading the article below.

Alternatively, you can contact our office directly on 01738 583008 to speak to us further about buy-to-let mortgages in Scotland.

What is a Buy-To-Let Mortgage?

A buy-to-let mortgage is a loan that enables you to make a profit on a property you own by renting it out to tenants.

Unlike residential mortgages, this type of mortgage is typically arranged on an interest-only basis, meaning that you, as the landlord, will pay back the interest rates on any loan and not the monthly repayments towards what you have borrowed.

Instead, you pay back the full loan amount at the end of the mortgage term.

Buy-to-let mortgages are attractive options for those wishing to make returns on property, but it’s important to consider your financial situation carefully before committing to a buy-to-let mortgage.

To get a better idea of whether a buy-to-let mortgage is right for you, consider speaking to an experienced buy-to-let mortgage broker in Scotland, such as The Lending Channel. We'd be more than happy to lend our friendly and expert advice.

What Are the Advantages of Buy-To-Let Mortgages?

A buy-to-let mortgage is purchased with the intention of renting out the property for other people to live in it. If you are seeking a property for yourself to live in, you should choose a residential property mortgage.

The main benefit of a buy-to-let mortgage is clear; the owner of the buy-to-let mortgage (and the property) becomes the landlord and can make a profit on the property by charging a rent that is higher than the mortgage repayments.

In this way, you can re-pay your mortgage whilst also making a return on your investment. However, it’s important to consider what other repayments you also have. For example, if you are still paying off your current residential mortgage, it may not be worth purchasing a buy-to-let property, as the extra income you receive will likely not be enough to cover both mortgage repayments.

Of course, a lot depends on your own financial situation and future goals.

The main benefits of a buy-to-let mortgage are:

Receive an extra income that will cover mortgage repayments plus additional extras depending on how much rent you decide to charge
Get a foot on the property ladder
Valuable landlord experience
A reliable, long-term investment which may increase over time
Tax reclaims against some of the costs of running your rental property on your self-assessment tax return

buy-to-let mortgage calculations

Am I Eligible For A Buy-To-Let Mortgage In Scotland?

You must meet the BTL mortgage eligibility, all of which can discussed with your buy-to-let mortgage broken in more detail. Our mortgage brokers will talk you through all the requirements and offer specialist guidance on how to get accepted for a buy-to-let mortgage in Scotland.

The main criteria many buy-to-let mortgage lenders consider, include:

Income: this will determine the amount you can borrow. However, this factor often more relaxed for buy-to-Let mortgages.
Age: certain lenders have stricter criteria than others in regards to the age of the applicant. You must be 18 years to apply for buy-to-let mortgages; however, many providers may prefer an applicant to be over 21, or in some cased 25 or older.
The property you wish to purchase: standard properties are much more mortgageable as some buy to let mortgage lenders will dismiss any listed building and those with thatched roods or timbers frame constructions; anything they may see as 'high risk'.
The property's intended use: straightforward letting arrangements are seen more favourably by lenders, with student accommodation and holiday lets less so.
Homeowner status: loans are more readily granted if you have been the homeowner for a longer period of time and have kept up with your regular repayments.

Whether you’re a seasoned investor or exploring the option of becoming a landlord for the first time, you may already be aware that a range of reforms on the buy-to-let sector in recent months have impacted the factors you should consider first?

These reforms may affect your decision to invest in buy-to-let property; however, The Lending Channel are buy-to-let mortgage experts, providing tailored advice to help you find the right options depending on your current circumstances.

Give us a call today on 01738 583008 to take a step closer to achieving a buy-to-let mortgage.

What’s Changed with Buy-To-Let Mortgage Requirements?

Landlords must now register with either The Property Ombudsman [1] (in Scotland, The Property Ombudsman Scotland [2], a separate legal body) or The Property Redress Scheme [3] to provide an independent arbiter who can rule in disputes between landlords and tenants (or letting agents and their customers). Any property to be leased after April 2018 must also have a minimum energy efficiency rating of E. (Pre-existing tenancies had until 2020 to comply.) Providing false information on this could lead to a fine of up to £5000, so if you’re looking now, be sure to clarify the property’s energy rating if you are interested in buying it.

Many local authorities now require you to register as a landlord, even if you’re an expat seeking lending to let a property in the UK while you are resident overseas. Around 300 Local Authorities across the UK either have some form of scheme in place already or are currently consulting on introducing a landlord registration scheme. We recommend you check your local council’s website to see if this affects you. There are also proposals to introduce inspections on rented properties every three years. While this is not yet confirmed, bear it in mind when looking at the overall condition of any property you’re considering making an offer on.

The government has increased the Capital Gains Tax (CGT) allowance for 2020-21. It has recently changed from £12,000 to £12,300. However, the CGT system currently in place is still under review, so there may be changes to look out for in the near future. For all options in the buy-to-let market, we recommend that you seek specialist advice from an authorised tax advisor before making any firm commitments as The Lending Channel is not authorised as tax advisors.

Against all this, lenders are also imposing their own stricter restrictions on portfolio mortgages. Suppose you are adding a fourth property (or above) to your rental portfolio. In that case, you will now need to show full financial information for each existing property when applying for new finance. This means that if you’re already heavily mortgaged with your existing portfolio, a lender might now refuse to advance any additional loan.

In 2019, the government was considering the abolition of Section 21, which allowed landlords to end ‘rolling’ tenancies without reason and with two months’ notice. This reform may see movement in the coming years, and so is something buy-to-let investors should keep an eye on.

CASE STUDY
Client Need An experienced property investor who owned one property in a limited company structure and a further six, which were mainly HMOs in Edinburgh, were owned in their name. For various reasons, they wanted to move all six into the company, primarily to streamline administration. In having six properties to transact, they were aware they could take advantage of the relief from the 3% Additional Dwelling Supplement on LBTT. One of the properties was a current primary residence, and intending to turn it into a buy-to-let this added a further element that provided an issue for some lenders.
Solution Bank of Scotland funded a £1.2m Partially Amortised Loan at a sub 3% pay rate across six of the properties
Client Comment “The Lending Channel appraised the complex detail of my proposition and didn’t shy away from the challenge. Working within limited company lending, HMO lending in Scotland – with a ‘Let to Buy’ element – was not an easy proposition during late 2017/early 2018. The Lending Channel excelled in listening to my requirements, took on board my competing parameters of flexibility, price and capital raised, and delivered the best solution within what the market could offer at the time. Hats off to the dedication and patience of all the team for helping to deliver a proposition that has helped my business expand.” MP Edinburgh.

CASE STUDY

Client Need

An experienced property investor who owned one property in a limited company structure and a further six, which were mainly HMOs in Edinburgh, were owned in their name. For various reasons, they wanted to move all six into the company, primarily to streamline administration.

In having six properties to transact, they were aware they could take advantage of the relief from the 3% Additional Dwelling Supplement on LBTT. One of the properties was a current primary residence, and intending to turn it into a buy-to-let this added a further element that provided an issue for some lenders.

Solution

Bank of Scotland funded a £1.2m Partially Amortised Loan at a sub 3% pay rate across six of the properties

Client Comment

“The Lending Channel appraised the complex detail of my proposition and didn’t shy away from the challenge. Working within limited company lending, HMO lending in Scotland – with a ‘Let to Buy’ element – was not an easy proposition during late 2017/early 2018.

The Lending Channel excelled in listening to my requirements, took on board my competing parameters of flexibility, price and capital raised, and delivered the best solution within what the market could offer at the time. Hats off to the dedication and patience of all the team for helping to deliver a proposition that has helped my business expand.” MP Edinburgh.

alarm clock and stack of money investment

Why Choose The Lending Channel as Your Buy-To-Let Mortgage Broker?

Unlike other mortgage brokers who only cater to standard mortgages, we have a team of vastly experienced specialist mortgage advisers who are experts in helping our clients find the right financial solutions for them based on their current financial and personal situations.

When it comes to BTL properties, we have in-depth knowledge of all forms of specialist mortgage that you will not find with a high street broker. Combined with our strong relationships with specialist lenders around the country and our dedication to finding not only the best but the right deals for you, we're the obvious choice to assist you with specialised buy-to-let mortgages.

Some of the buy-to-let mortgages we specialise in include:

Portfolio Lending We support many professional landlords and specialise in large, multi-property transactions, where portfolios of more than 40 properties are not uncommon. This category applies to anyone with a portfolio of four or more properties.
Limited Company Lending This route is available for landlords who want to acquire new property by setting up a new Special Purpose Vehicle (SPV) or those who wish to transfer properties currently under their name into a new company. Transferring six or more properties into a limited company will allow clients to get relief from the 3% Additional Dwelling Supplement charge.
HMO Mortgages Landlords active in the House of Multiple Occupation (HMO) market, commonly used for student accommodation, can obtain specialist mortgage rates.
Short-Term Holiday Lets There are tax advantages to this option, making it increasingly popular as an alternative to traditional buy-to-let. You can offset the interest you will pay on a mortgage for a holiday lodge against its rental income. You need a specific mortgage for the short-term holiday letting market, and fewer lenders are offering this mortgage product. Typically, they’ll impose stricter restrictions on the loan to value they’ll advance.

Contact an Experienced Buy-To-Let Mortgage Broker Today

If you are interested in exploring any of the above buy-to-let mortgage options detailed about, or simply require further advice on buy-to-let mortgages in general, please don't hesitate to get in touch with The Lending Channel today.

We are expert buy-to-let mortgage advisers and have helped many budding landlords take their first step onto the landlord.

Contact us today for free, no-obligation financial advice on buy-to-let mortgages in Scotland to start your mortgage application.

Portfolio Lender

Let us find the right Portfolio Lender for you. We support many professional landlords and specialise in large, multiple property transactions, where portfolios of more than 40 properties are not uncommon. If this applies to you, a portfolio loan might work for you in many ways. Get in touch to discuss your situation and receive no-obligation guidance on portfolio loans.

Limited Company Lending

Save money by setting up a limited company before acquiring your buy-to-let property. If you choose this route, you will need a specialist mortgage. We can help source, explain and get you started, just get in touch.

HMO Lending

HMO property is a lucrative investment for a landlord, but securing the right mortgage can be tricky. We can advise you with our in-depth market knowledge, just get in touch to discuss any mortgage needs you may have.

Short-Term Holiday Lets

Could short-term holiday letting be the most profitable option for you? Discover the benefits of this route and how we can help make your investment a success. For advice, guidance and help finding the best deals on this specialist type of mortgage, get in touch.