If you are looking for a buy to let mortgage on a high-value property, the challenge of securing finance can be tough. A specialist broker could make a big difference in sourcing the size of loan you need at a competitive rate.
On bigger loans, personal financial circumstances are scrutinised in much closer detail.
There are buy to let mortgage lenders who will loan up to £15 million based on affordability calculations, but these affordability criteria can be complicated. A specialist broker with current lender and product knowledge can smooth the process.
Where particularly large sums are borrowed, there is naturally a greater risk to the lender.
Consequently, lenders may ask for a higher deposit, perhaps as much as 40% of the property value, in order to secure a mortgage loan.
It is worth shopping around, as different loan values will attract different mortgage interest rates and different fees and this is another area where a larger broker can help.
Affordability calculations are key
In some cases, rental income is the only consideration when assessing affordability, so there could be a challenge if the rent doesn’t cover the repayments and affordability criteria.
Another approach may allow other types of regular income to be considered (such as employed earnings). This is a process known as’ top slicing’, and some lenders allow it in cases where the rental income alone is insufficient to meet affordability criteria.
A smaller group of lenders will use an income multiplier calculation, which multiplies the applicant(s)’ earned income by a certain figure for example 4.5 times annual salary – although this can vary from lender to lender), to work out the maximum loan that will be considered.
However, bear in mind that some lenders will also look at background borrowing, such as residential mortgages, credit cards or loans, which can significantly reduce the amount they will lend you.
With so many complexities, each buy to let mortgage application will have its own unique set of circumstances. A large, specialist buy to let broker can discuss your situation and then pinpoint the most appropriate product for you, from across the market.
They can also explain the affordability calculations involved, to help determine how much you might be able to borrow.
A broker will identify the most competitive rates and what charges will apply to the buy to let mortgage.