It is fair to say that the buy to let mortgage market has been one of the more volatile areas of the UK financial sector of late. While demand for rental property continues to grow, the UK government and regulatory authorities (Prudential Regulation Authority) have made a number of changes to protect market integrity. In light of the 2008 US sub-prime mortgage crash the authorities initially reduced loan to value ratios and introduced a more stringent affordability test. We have also seen the announcement of tapered tax relief for landlords which could prove costly for high net worth individuals.
As a consequence of regulatory changes with regards to mortgage tax relief it is important to choose the right investment vehicle for your buy to let portfolio. While the headline grabbing tapered tax relief has caused some concern amongst high net worth individual investors there are ways a means of mitigating this. The use of limited companies or SPVs is certainly an option for those looking for a long-term career in buy to let. However, as the regulatory and tax landscape continues to move it is important to get the best advice for your property investments.
Before you look at any type of commercial mortgage arrangement you need to have a clear investment strategy and timescale. Are you looking to acquire new property or perhaps refinance an existing buy to let asset? Are you looking for long-term arrangement or is this maybe is a short-term stepping stone to releasing funds in the future?
Despite the fact that the majority of buy to let mortgage payments are well covered by rental income, mainstream mortgage provider still require proof of personal income. This does not include rental income from buy to let properties which many financial institutions class as “uncertain”. The specific requirements for a buy to let mortgage will vary from lender to lender but the high street is broadly universal in its approach.
It is vital that you not only find the correct vehicle in which to undertake your investment journey but also utilise existing assets to the full. We have access to an array of specialist buy to let mortgage advisers taking in traditional buy to let mortgages and expat buy to let mortgages. These specialist lenders will take into account additional assets as well as short, medium and long-term income streams. By using our contact and experienced we can also tap into secure finance by cross charging assets, releasing equity elsewhere and prepaying interest. All of these will have a positive impact on not only your buy to let interest rate but also the terms and duration of the arrangement.
Over the years we have gathered an array of contacts in the specialist buy to let mortgage market, gained experience right across the board and access to finance which is not readily available to high street lenders. We can therefore work with you to bring your existing assets and income streams to the fore, increase security for lenders and reduce financial charges going forward. We also have a detailed understanding of the current tax environment, likely changes going forward and how this will impact high net worth individuals.
While securing the best rates and a structure which suits your financial situation is obvious, you also need to have this in the correct investment vehicle. The current buy to let market is littered with potential tax challenges. Give us a call today to discuss your situation in more detail and we will advise you of the options available and current rates on the market.