Buy To Let

Buy to Let (BTL) mortgage is for people buying a residential property with a view to letting (renting) it to someone else as a form of investment.

BTL mortgages are very similar to regular mortgages, but with some differences as higher fees and usually higher interest-only mortgage rates.

At sMighty Mortgage Deals, you will get professional advice and all options and costs would be explained to you from start to finish.

Issues such as rental cover ratios, yield and monthly rental income would be carefully considered to determine the profitability of your investment and find the maximum loan available for you.

If you have a portfolio of properties, we can review the mortgage interest rates on the properties to improve the overall performance of your investments.

For any Buy to Let mortgage requirement, please contact sMighty Mortgage Deals by submitting an Enquiry Form and I’ll search our comprehensive panel of lenders to find Buy to Let deals that meet your needs, without leaving footprint on your credit report.

BTL Features

  • Up to 85% LTV
  • HMO
  • Large HMO
  • BTL remortgages
  • First time landlords
  • Properties can be held using SPV or Special Purpose Vehicle and limited companies
  • Maximum age 75 at the end of mortgage term
  • No requirement to be a homeowner
  • Semi-commercial properties
  • Block of flats
  • Multi units freehold blocks

Terminologies Explained

HMO – is a property rented out to at least 3 tenants forming more than one household and share facilities such as bathroom and kitchen.

Large HMO – is a property rented out to at least 5 tenants or more forming more than one household and sharing facilities such as bathroom and kitchen. The property must be at least 3 storeys high. You must check your local council for a HMO licence.

Rental Cover Ratio – the proportion of the mortgage payment covered by the anticipated rental income

Rental Yield – is a percentage figure, calculated by taking the annual rental income of a property and dividing it by the total amount that has been invested in that property. It is the return a property investor is likely to achieve on a property through rent.

SPV or Special Purpose Vehicle – is a way of holding business property through a limited company rather than the individual holding the property in their own name.

Experts predict that changes to the taxation of BTL property  are likely to lead to an increase in the number of property-letting SPVs.

An SPV can claim the same running expenses as an individual landlord, but in addition, an SPV can claim mortgage interest in full as a business expense.

SPVs pay corporation tax on rental income received, less expenses at 19 per cent. Shareholders of SPV pay income tax on salary and dividends they receive from the SPV.

It is up to the board of directors to decide whether to distribute some or all of the income to shareholders as salary and / or dividends. The company is not obliged to pay a salary or a dividend to directors; it can retain the income (less corporation tax) in its bank account. This means that the directors can decide if and when to pay dividends, allowing them to control the amount of tax they pay.

Changing ownership is relatively simple, as SPV shares can be sold to a new owner without the property being transferred. Property-letting SPVs are able to claim expenses not available to individual owners.

Expenses deductible from rental income

  • Repairs
  • Maintenance
  • Insurance
  • Actual cost of replacing furnishings
  • Letting agent fees
  • Ground rent  on leasehold property
  • Service charges on leasehold property

BTL versus other investments

BTL with 25% deposit mortgage

UK commercial property

Equities/shares

UK Bonds

Based on the performance of £1,000 invested since 1996.