The first step onto the property ladder for some is not always a residential home to live in but becoming more common a Buy to Let (BTL) even via a Ltd Co.
First Time Buyers & Landlords Combined
As the property market evolves and (mainly) young people are looking to purchase their first property, occasionally you may have considered that 1st property to be a Buy to Let property. Quite often this is a smaller property to get on the housing ladder in some form or another. Historically, this was not the easiest to finance and only a handful of lenders would entertain the 1st time buyer/ 1st time landlord combination.
Since the tax changes a couple of years ago and the emergence of limited company lending, another spanner has been thrown into the mix with 1st time buyers looking at making that purchase using a limited company. Only recently have lenders flexed their criteria to enable this to happen, although it does come with certain criteria elements which are slightly restrictive but for good reason.
One of the main factors, regardless of if limited company or personal BTL is lenders will want to ensure the clients income is sufficient to cover the mortgage requirements. This is assessed in the same way as it would be as a residential purchase of a home to live in. Therefore, if you earned £25k but wanted to buy a £400k BTL this wouldn’t work for lenders as the risk is too high, however, on the same income, if you wanted to purchase a BTL for £100k then it is something they would consider. The rationale behind this is due to rare examples of people living in their Buy to Lets properties which breaches the mortgage conditions. People have used BTL products to purchase properties out of their financial reach so lenders have reviewed what can be done for 1st time buyers/ 1st time landlords.
Together with the income assessment, the property should be a straight forward BTL i.e. not a House of Multiple Occupancy (HMO), Holiday Let, Multi Unit or anything of any complexity. A simple 2-3 bed terrace let on a 12 month Assured Shorthold tenancy (AST) to a professional within the financial capabilities of the client is where these products have been designed.
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It is not particularly common in relation to the volumes of business in other sectors and clients however should this be relevant to your circumstances and you would like to discuss further please give Hawke a call.