Buying to let requires a specific mortgage product designed for the purpose. But in large part the process is very similar. Mortgage lenders will tend to concentrate on things like the rental income and less on your own earnings, largely because the loan is likely to be supported by the rent generated from the property.
Many buying to let will find themselves competing against buyers with significant cash resources and with cash comes the ability to act swiftly. Something which is appealing to most sellers. Therefore, if you are buying at auction if there is a tight time constraint, arranging an interim bridging loan might be a better short term funding option.
In most cases, the process of obtaining a buy to let loan usually takes between 4 – 6 weeks, although, as with all purchases, there are a variety of steps to the process which will delay or even stall the process.
The Buy to Let Mortgage Process.
- First, sit down with us so that we can better understand your situation and be better informed of your needs. We can also give you a general overview of the market, how much you are going to be able to borrow based on property type and rental income and your own circumstances.
- Then, we’ll trawl the market and source suitable lenders and rates for your consideration. Each lender has their own strict criteria, so one lender might be perfect for one investment but not be interested in funding another.
- Once we have selected the most attractive mortgage lender and product, we will apply for a Decision/Agreement in Principle (AIP) from the chosen lender. This will necessitate us compiling a good deal of information on your behalf.
- Once the AIP is agreed, we’ll help you complete the lender application.
- Once received, the lender will instruct a valuation on the property. This will confirm the buy to let property’s value, rental income and overall condition of the property.
- Once the valuation is complete and satisfactory, the lender can process your application. At this point you will need a solicitor or conveyancer involved to act for you (and probably also the lender) in the conveyance and the mortgage offer.
- When the lender is satisfied, they will issue a formal mortgage offer which outlines the terms and conditions of the loan. If happy with the terms, you’ll instruct your solicitors to complete the legal requirements.
- Once contracts are exchanged, you can agree on a date for completion and your solicitor will liaise with your lender to arrange for funds to be made available. If you’re remortgaging, your solicitor will request the funds from your lender.
- Completion! You are now the legal owner of the property and can get the keys.
For this process to run smoothly, it is important that no problems that might cause delays are ignored. Possible causes of delay include;
- Failure to provide all necessary information accurately and promptly, when requested by us. It might seem obvious, but if the lender needs information to make a decision or to issue a mortgage offer, a few days getting information to them can easily cost a week or more.
- Inefficient conveyancing! Yes, you heard right. Choosing your advisors wisely will save you time in the long run. Many people stick with who they know. If you don’t know anyone, don’t be afraid to ask friends and family who’ve had good and bad experiences of conveyancers and lawyers. At Mortgage Required we are happy to help.
- Poor communication. Especially during the holiday season, it can be very hard juggling between several parties’ diaries. Maintaining good avenues of communication so that delays are not incurred whilst your advisors and perhaps yourself or the seller are away sunning themselves can pay dividends.
- Make sure to transfer funds to your solicitor in good time and make sure they have funds for agreed expenses incurred on your behalf.
- Make a list of all the information you need to provide and start bringing together the information efficiently. Grabbing P60s, payslips, copies of tenancy agreements, etc can be time consuming and tedious, but it has to be done. We’re here to help you through the process.
To speak to an adviser about buy-to-let mortgages or make an appointment please call us on 01245 218018.