Since 2008 lending criteria for buy to let mortgages has become more stringent and for first time buyers getting a cost effective mortgage deal has become more challenging. With regard to eligibility for a buy to let mortgage we have outlined below some broad criteria although the market is constantly changing so it pays to speak to a buy to let mortgage specialist (see above link) to get the latest on what lenders will accept.
The minimum age you will be legally permitted to purchase a mortgage is 18, and you must also be under the age of 75 to be legally eligible to let a property. If you are already a home owner and can demonstrate a steady income you are more likely to succeed in getting a buy to let mortgage.
Your mortgage lender needs the reassurance that the rent you charge will cover your mortgage loan without substantial risks to them. Most mortgage lenders will insist on your rental income should be at least 130% of the mortgage repayment, serving as a guarantee of your mortgage repayment.
It is important to demonstrate to your mortgage lender that you are in employment (for three months in present role or 12 months permanent employment. If you are self employed, it is vital that you prove you have been self employed for 12 months or more.
It is necessary to remember that each application for a buy to let mortgage is considered on an individual basis and further evidence of financial situation may be required if your mortgage lender sees fit. You must provide the following documentation to be considered for a buy to let mortgage deal:
First time buyers:
- P60 form
- Bank statements for the last three months
- Your three most recent pay slips or accounts fir the last two years
Local authority tenants or current mortgage holders:
- Your latest landlord’s statement
- A legitimate copy of the Assured Shorthold Tenancy Agreement
Property being remortgaged to lender:
- Your last 12 months mortgage payments
Household insurance:
You must prove that you have purchased an insurance policy that covers you as a landlord in a way that is relevant, including flood and subsidence cover.
To discuss further the criteria required by UK lenders to get a buy to let mortgage deal use our specialist service.