Buy to let mortgages for first-time buyers

First of all, being a buy to let mortgage first time buyer may involve a little more effort as some lenders can be less enthusiastic about providing funds for those making their first attempt to acquire a buy to let property. This is definitely where expert advice will help you take the appropriate action to achieve your goal.

In the past, a buy to let mortgage could be easier to get than a residential mortgage because the rental income was seen as relatively sure-fire source of income, enabling the buyer to keep up the payments. In addition, the mortgage products were often interest only, so the repayments were not as high. Today, some lenders can be a little concerned that someone who appears to be a buy to let first time buyer may be purchasing the property ostensibly to rent out but then ends up living in it themselves.

Lenders will want to know that the purchased property will definitely be rented out. If you want to buy a property and then live in the property, you will need to get a residential mortgage. However being a buy to let mortgage first time buyer is perfectly achievable if you genuinely plan for the property to be occupied by tenants.

The deposit is often the hardest aspect of the deal for first time landlords; assimilating a large sum of money can be difficult for even the most dedicated saver. A deposit to buy any property will require thousands of pounds. In purchasing a buy to let property, lenders will generally ask for a deposit that is 25 per cent at the minimum. However, there are other costs involved as well and you will need funds to cover these as well.

There will be fees in valuing the property, arranging the mortgage and there will also be costs associated with energy and gas safety certificates that need to be arranged before a property can be let. The property may also need to be cleaned or repaired and it may not be occupied for 52 weeks of every year, so there needs to be some cash available to cover the mortgage and other costs if the property is sitting empty.

Then there is the issue of stamp duty. Stamp duty is essentially a tax paid to the Government on the price of the property and there is no avoiding it. There is a discount for first time residential buyers, but you will not be entitled to this if you are buying for the purpose of letting. For residential buyers, if the property is worth less than £300,000, then there won’t be any stamp duty to pay. If the property is worth more than £300,000 and less than £500,000, you will pay 5 per cent of the amount in excess of £300,000.

If you're purchasing your first buy to let property, then there is no discount, but at least you will not have to pay the additional 3 per cent required from buyers who already own buy to let property. Purchasers who already have rental properties pay 8 per cent stamp duty on additional purchases.

You should also be aware that the tax situation has changed somewhat, with increasing restrictions with regard to off-setting mortgage interest costs against your tax liability. Our expert team can provide further information and advice in this area.