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Buy-to-let mortgages for first time buyers

Can a first time buyer get a buy to let mortgage?

The good news is yes, it is possible to get a buy to let mortgage when you’re a first time landlord and a first time buyer, but it’s not necessarily easy. There are lots of factors to consider, and lenders can be more selective when it comes to lending to first time buyers on a buy to let basis.

But help is at hand – our expert advisers here at Which? Mortgage Advisers have experience of offering buy to let advice to first time buyers; we cut through the jargon and talk through your goals with you. We help work out what you really need, scour the market to find the best deals available and explain what your options are. We take into account more than just rates, but look at which deals suit your personal circumstances and which lenders can meet your timescales.

If you’re looking for personalised advice call 0800 980 3892 to speak to one of our independent advisers now. You can also check out our handy step by step guide below.

Becoming a first time buyer landlord:

1. Be sure it’s buy to let you need – you can’t live in a property you own with a buy to let mortgage

Historically buy to let mortgages have been easier to come by than residential mortgages, so lenders are keen to make sure that customers don’t take out a buy to let mortgage because it is easier to secure, and then live in the property. If you are planning on living in the property you’re purchasing then it’s a residential mortgage you’ll need.

2. Know your options

Many lenders won’t lend to first time buyers on a buy to let basis because they see this as a riskier option. Because they view the mortgage as higher risk they’ll often ask for more from a first time buyer than they would an experienced landlord, for example a higher deposit or a higher ratio of rental income to mortgage payments. Higher deposit requirements could mean that you can’t afford a buy to let mortgage singlehandedly, but there could be other options available to you.

For example you may be able to purchase the property jointly with a parent or potentially take out a guarantor mortgage. The options available to you will completely depend on your circumstances and the deals lenders are offering at the time, our experienced advisers can talk you through the options available to you and make a mortgage recommendation tailored to your needs. Give us a call on 0800 980 3892 to speak to an expert Which? Mortgage Adviser now.

3. Make sure you’re prepared financially

Firstly you’ll need a minimum of a 25% deposit for most lenders. Then you need to consider fees on top of that. Taking out a mortgage can incur a range of costs such as arrangement fees, product fees and valuation fees – these don’t apply to all mortgages but a qualified mortgage adviser will be able to explain all the fees attached to the products available to you.

Don’t make the mistake of assuming that the property will always be let – it’s important to have a back up plan for how you’ll pay the mortgage if you don’t have a tenant. You’ll also need to keep track of the rental income you receive, and we recommend that you speak to an independent tax adviser about the taxes you’ll need to pay on any income related to your new property.

4. Be aware of the impact the buy to let mortgage will have on future residential mortgage applications

If in the future you want to take out a mortgage on a place you intend to live in, but still keep your buy to let property, when you come to apply for the new residential mortgage lenders will view your financial situation as a whole. This means they’ll take into account any debt you have outstanding on your buy to let property, which could put you at a disadvantage. The new prospective lender may want to see evidence of the income you’re receiving for your buy to let mortgage in the form of tax returns showing your rental income. This may not always be an issue, but it’s something you need to be aware of before you start on your journey, and a mortgage adviser can talk you through how this could impact you.

5. Do your homework when it comes to becoming a first time landlord

Becoming a landlord can be very exciting, but don’t underestimate the amount of work involved. We’ve developed a handy interactive guide to becoming a landlord which covers areas like the legal aspects to consider and advice on tricky areas like problem tenants. We’ve also got a general buy to let guide which covers areas like the deposit you’ll need and calculating your return.

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