Commercial Buy To Let

We have dedicated Buy To Let consultants who can provide sound help and advice with all types of Buy To Let mortgages.

Across the marketplace, business lenders have their likes and dislikes for certain sectors of the market. For example, one may prefer the leisure industry whilst another prefers commercial investment or buy-to-let propositions. At Access Commercial Ltd we know each lender’s preferences and which lenders within each sector is offering the most competitive interest rates.

Buy-To-Let General Information

Buy to let mortgages for residential properties are a surprisingly recent innovation in the UK market. Bradford & Bingley, which runs Mortgage Express, introduced buy to let mortgages in 1996, at the behest of the ARLA, the Association of Residential Letting Agents (ARLA), following a change in the law that gave property owners more power to evict tenants who failed to pay their rent. Today, more than seventy lenders offer buy to let mortgages, with the value of the buy to let property market estimated at more than £73 billion and showing no signs of slowing down.

When the first buy to let mortgages were introduced, repayments were set at 4 percent above Bank of England Base Rate. Nowadays, increased competition between lenders means that buy to let mortgages can sometimes be obtained with repayments at 1 percent above base rate.

Choosing a Buy to Let Property

Investors acquire buy to let properties for two main reasons: to generate income and to accumulate capital. 

A prudent property purchase should result in both these aims being achieved. However, an investor should decide which of these aims is the more important because it is likely to influence the type of property that is purchased.

From the borrower’s point of view, two main differences exist between a buy to let mortgage and a conventional homebuyer’s mortgage:

• The size of the mortgage is determined by the projected rental income that can be achieved from the property
• The borrower will have to pay around 20 percent of the cost of the property from their own resources

Many mortgage providers will expect the rental income from a buy to let property to cover 135 percent of the cost of the interest payments, but some will calculate the size of the mortgage using a lower percentage rate.

Summary

• Buy to let mortgages were introduced to the UK in 1996
• More than 70 different lenders currently offer buy to let mortgages
• Buy to let mortgages are available at interest rates similar to traditional homebuyers’ mortgages, as a result of competition between lenders