If you work for yourself, you’re used to forging a more unconventional path through life – and part of your journey might involve investing in a rental property as another source of income.
If you’re looking into becoming a landlord, getting the right advice is vital. That’s where we can help. Our mortgage service includes years of experience helping self-employed professionals secure great rates on Buy to Let mortgages that are designed to work for them both now and in the longer term. If you're looking to finance an investment property within the rental market, we're ready and waiting with the expert advice you need to make your mortgage application.
Read on for more information on what’s involved in attaining a Buy to Let deal as a contractor, and a list of some of the things you’ll need to consider when submitting your application.
What to consider when applying for a Buy to Let mortgage
A Buy to Let (BTL) mortgage is designed for people who are looking to purchase additional property and rent it out in order to make a profit on their initial investment. In the UK, there are no limits on how many properties one person can own – so, as long as you understand your responsibilities and duties as a landlord, it can be an incredibly lucrative way to generate capital.
When looking for a Buy to Let mortgage, price is a very important factor, as it will directly affect the viability of your investment. When working out how much you can afford, you will need to consider how much you will need to set aside for the payments on your residential mortgage (if you have one), as well as any other financial commitments that could affect your ability to keep on top of your BTL mortgage repayments.
You need to consider the expected rental income, what happens when you don't have a tenant in place, how you may manage any changes in the rental market, the mortgage interest rates on your buy to let property, income tax payments, and how your financial situation measures up to the lending criteria. These are only a few of the items that affect BTL mortgages. As an expert mortgage broker, we can help you uncover any of the items you may have overlooked, guiding you through every step in securing your mortgage loan.
Remember too, that as a form of commercial loan, Buy to Let deposits are significantly larger than those for a standard residential mortgage. You will usually need a bigger down payment to not only secure a mortgage in the first place but access the most competitive rates.
Buy to Let mortgages have been notoriously difficult to obtain in the past due to stringent income and affordability checks, not to mention volatile markets. For the best chance of success, it’s important to explore all your available options before making a decision about which lender you choose.
How will being a contractor affect your BTL mortgage application?
If you’re a contractor and you want to qualify for a Buy to Let mortgage, you may find that lenders will ask you for around three years of accounts. This can cause big issues if you haven’t been contracting for this amount of time, or if you draw out your income via company dividends, as this will make your net income average look low.
Lenders can sometimes be hesitant to offer credit to contractors. Many companies believe that a contractor’s employment status is not completely secure, and steady income is not guaranteed. And while your earnings aren’t factored into your credit score, your debt-to-ratio income will have a huge bearing on your rating, so your overall financial health needs to be taken into consideration, too.
While the mortgage landscape has changed a lot over recent years, many High Street lenders are still not making it easy for contractors to get BTL mortgages. That said, there are specialists in the market who are more than happy to take a view of your circumstances and provide solutions, not barriers.
At CLS Money, we work with a range of brokers who are dedicated to helping contractors like you find the right deals to help finance their investments.
Why use a mortgage broker?
Our advisers specialise in helping self-employed individuals realise their dreams of becoming a Buy to Let investor. While some of the bigger and better-known High Street lenders may not be keen to loan to you, there are many companies here in the UK operating with more flexible eligibility criteria – and we can help you approach them in a way that will give your application the best chance of being approved.
Working with us is a breeze. Offering free advice, flexible appointment times, and full support right up to completion, we make sure the mortgage process is as easy and stress-free as possible. We’ve already received thousands of 5-star reviews from happy customers who have valued our input and assistance.
Contact us now to book your free, no-obligation consultation.