Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage
Looking to buy for investment?
Investing in property is still regarded by many as the safe option. Of course we can’t predict the future, but over the longer term property prices have made investors healthy profits. Add this to strong rental income, the overall returns of such an investment can be far higher than expected. As with any investment past performance is not a guide to future performance. Why not have an informal chat with Max Mortgages to see what your options may be?
Much of the public is pretty much in a Post-Brexit mood – although we have only voted to exit Europe. But with this factor and other changes to buy to let taxes, the property market has already become more stable.
As of 1st January 2017, regulators have imposed stricter stress tests on Buy to Let mortgages meaning a given monthly rental income will now secure a lower mortgage. In many parts of the country this is not a major issue, but certainly in South East England where the rental yields are much lower, buyers are having to put 30-40% deposit rather than the usual 25%. Again as experienced mortgages advisors we can help select a lender to maximise the borrowing amount whether its by choosing a lender with a lower stress test or in some cases by utilising top slicing whereby your back ground income supplements the rent to obtain the desired loan amount.
Again depending your situation, we will help source a lender who has a stress test and criteria which best meets your needs. The market certainly favours the stronger buy to let purchasers at this moment. Visit our Buy to Let calculator and see what you may be able to borrow
With Brexit and the tax changes to additional properties, this certainly has made the market more steady. And you may just pick up a bargain!
Thinking of buying using a limited company? Find Out More Here.
Buy to let mortgages are not regulated by the Financial Conduct Authority
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As a Buy to Let Buyer:
- Rental income, not your personal income, will be main factor for a Buy to Let mortgage
- Your mortgage may be interest only. This means better cash flow and tax relief
- The term can extend well past your 80th birthday allowing you to benefit from an additional income supplementing your pension. Although many lenders insist you are below age 70 at time of application
- Not always a requirement for any minimum personal income in the background
- Rent should cover mortgage repayments and associated costs to leave you with a surplus
But:
- You will need to pay an additional 3% stamp duty surcharge unless you are a First Time Buyer or a non-property owner
- Gross rental income is added to your overall income, and if this puts you in a high or higher rate tax bracket, additional tax will be payable. This was phased in from 2017 to 2020 at 25% increments. Basic rate or non-tax payers will not be affected
- Rental voids or periods of low rent may not cover your costs
The 3% Stamp Duty Surcharge
There are a few misconceptions on this one. We often get clients who for example want to buy a property in their sole name rather than jointly with their spouse. To be blunt, you are not the first person to have that Eureka moment. Its like applicants getting a massive pay rise just before the mortgage application. Do you really think no one has thought of that before? Let’s be real.
If you have use of a home, whether you are on the property deeds or not, it does not matter. If you have use of a home, under current HMRC guidelines, you should be asked to pay the extra 3%. You should be concerned if you are being advised otherwise. Our aim is to provide you the right advice and ensure any actions that are needed are undertaken at the appropriate time both now and as part of our aftercare service.
However the use of guarantor mortgages and sole proprietor purchases may help you not pay this extra 3% if an existing home owner is helping you get on the property ladder.
Ready to take the next step? Click Here