Top Tips If You Are a Buy to Let First Time Buyer

Buy-to-let mortgages are aimed at property investors who want to buy a property and then rent it to tenants. The bought property can be used exclusively for renting purposes, and that’s why the buy-to-let mortgage is different from the residential counterpart. If you never bought a property before but want to apply for a buy to let first time buyer mortgage, you should discuss with an expert mortgage broker. Getting assistance from a broker is the best way you can increase your chances of success. A mortgage broker can help you with everything: from talking to the lender to handling your paperwork, guiding you in the process, and also with future remortgage advice.

How Hard It Is to Get Buy to Let First Time Buyer Mortgage

First-time buyers always have a chance to secure a mortgage if they work with an expert mortgage broker. Lenders usually view first-time buyers as high-risk, which is why they take additional steps to make sure that the future buy-to-let owner will not fall short of their expectations. If you are a buy to let first time buyer, you might be asked to put down a larger deposit. There is also a chance that your lender will expect your monthly rental yield to be higher than in most cases. 

The lender’s criteria will vary from case to case, so it is best to consult with a mortgage broker before applying for a mortgage. If you get a decent deal for the property, your mortgage broker will be able to help you with remortgage advice in the future. There are certain factors that all lenders will take into account when analyzing an application:

  • The initial deposit. It can be anywhere from 25% to 50% of the property’s value for first-time buyers. Many lenders will try to cover their risks with a larger deposit from you. This is made to ensure that in case things go wrong, they have more financial cover.
  • Your income. Lenders will measure your monthly or yearly income to see if it fits their requirements. Expect to be asked for a bigger income than for normal mortgages. This is done to cover the risk of not having tenants for extended periods. Lenders might want you to be able to pay the monthly rates even if you don’t have tenants for that month. 
  • Property’s potential. Lenders will carefully analyze the property you want to buy to see if it can generate enough income through rent to cover the monthly repayments. If a property doesn’t generate enough rent to cover the monthly repayments, you cannot get a mortgage for it. 
  • Your credit score. Your credit score is one of the most important factors that will influence the outcome of your application. Buy to let first-time buyer applicants must have a good credit score if they want to submit a successful application. Expert mortgage brokers can help you get a deal even with credit scores that might fall short of most lenders’ expectations. If that is your case, you could get a deal with a larger deposit and higher monthly costs. Your mortgage broker will be able to help you with remortgage advice in the future and secure a good deal for you. However, that will only be possible after you prove to be a productive landlord.
  • Your age. Even if you might not consider it relevant, your lender is guaranteed to take your age into consideration. If you are too young or too old for their preference, you might not get the desired deal. Each lender is different, so it is best to talk to a mortgage expert to know what to expect. 
  • Your employment type. If you have a high income, it doesn’t mean you are guaranteed to secure a mortgage. Your lender will check what type of employment you are on. If you switch your jobs every now and then and don’t have a constant job, you are less likely to receive the funding. If you work as a freelancer, you will be asked for a financial situation that spans one or two years back to see if you have a steady source of income. 

What to Do If You Don’t Fit the Requirements

If you don’t fit the requirements mentioned above, you need to know that you can still be eligible for a buy to let mortgage. Even if you don’t have access to the best deals on the market, you can still get your money. It is important to make sure your desired property will generate enough revenue in the future before deciding to apply for a mortgage if you don’t meet the recommended requirements. This way, you can make sure you can cover the higher interest rates you will get for your deal.

Work With a Broker for Guidance and Remortgage Advice

Your best bet for a lesser impact on your financial situation is to work with a mortgage broker. If you didn’t meet the recommended eligibility criteria when you applied for your buy to let first time buyer mortgage you probably didn’t get the best deal possible. That means you had to bring a larger deposit and pay more monthly interest. If that is the case, your mortgage broker will offer you remortgage advice so you can get a new deal as soon as possible. This is usually between two and five years after the initial deal. 

If you are a buy to let first time buyer and want to get into the world of real estate, it is essential that you work with an expert mortgage broker. First-time buyers are considered high-risk by most lenders, and many won’t even consider talking directly to them. Your broker can help you get the best deal for your situation. 

If you have a bad credit score, your mortgage broker can still work out a deal for you even if it’s not on the best possible terms. Following the initial mortgage deal, your broker can guide you and offer you remortgage advice for the future, when you are eligible for a new and better deal.

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