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For many contractors, buy to let mortgages form a large part of their retirement plans. But this type of investment has a huge benefit over even the best pension plan. The rent paid by tenants, when managed correctly, brings welcome additional monthly income, too.
Whilst contractor pensions can help with reducing taxes, they deliver no tangible profit. As a buy to let landlord, your rental income provides real-time cashflow into your savings or business.
When you set out contracting, the last thing you considered was becoming a property magnate. For a start, doesn’t buying a home just to rent it out just seem like adding more to the #ToDoList? Perhaps not as much as you’d think…
Why are there so many Buy-To-Let mortgages?
There are reasons why mortgage lenders have welcomed wannabe landlords in recent years. In the wake of the credit crunch, many prior acceptable credit scores became undesirable.
The prospective home owner had done little different than in more affluent times. But once the housing bubble burst, the rules themselves changed. From handing out mortgages like confetti, lenders became shrewd, picking and choosing clientele.
The result was a huge vacuum in the housing market. Would be first time buyers didn’t meet the new affordability criteria. Existing homeowners became mortgage prisoners. They found themselves stuck in homes that had slumped in value and no longer creditworthy.
With this market inaccessible, lenders had to balance their books somehow. The problem was, their hands were tied, even though the private rental market continued to grow.
Contractors with perfect credit and high earnings offered lenders an indirect route to market. Buy-To-Let became both a wise investment choice and accessible to those whose profiles fit the bill.
Also, demand from people who couldn’t get on the property ladder pushed average rent up across the board. It was this combination of factors that enticed more independent professionals to become landlords.
Whilst mortgage providers are less stringent in more recent times, the backlog of those who missed out on owning a home is huge.
Many from that generation have faced up to the prospect that private rental is the only way out of their parental home. Thus, the market is still burgeoning today and shows no sign of receding any time soon.
How do contractors get on the landlord bandwagon?
As you’d expect, there are many lenders offering buy to let mortgages. But don’t think that just because you’re a high-earning contractor they’ll accept you at will.
The problem exists with buy to let as with all mortgages for contractors. In-branch advisors aren’t trained to work out your affordability from your accounts or contract. They still work to the PAYE ‘take home’ model, which rules most tax-efficient contractors out of the game.
To qualify, you need to find a specialist broker who has access to underwriters who understand contracting. As there are so many products, you also want access to the whole of market, not just one lender.
As most High Street lenders sell only their own mortgages, this route can restrict your options, too. Only a broker wholly independent can offer you the complete range of competitive buy to let mortgages on the market.
What does a BTL application entail?
At C&F Mortgages™, we give you both:
- access to savvy underwriters with whom we’ve negotiated special terms for contractors;
- free reign on product choice, as we are FCA approved independent mortgage brokers.
But we go much further than that. We work with you to help you realise your full rental potential on the whole package.
We’ll help you:
- work out your mortgage affordability based on your projected rental income;
- look at both fixed and tracker rate mortgages to see which is best at that snapshot in time;
- decide whether it’s best to borrow in your own name or as part of a joint application;
- demonstrate your affordability, whether you’re a limited company or umbrella contractor;
- choose which is the best way to let out your new property;
- transfer an existing buy-to-let mortgage (if applicable) to a new leasable property.
As you’d expect, we also help with the basics of the mortgage. We have a transparent administration fee, with no hidden extras. What you see is what you pay.
The mortgages we can secure for you range from £35,000 up to £1M, depending upon availability at specific lenders.
And no matter what the value of the home, we work on quick turnaround. Having direct access to the underwriters, we cut down the time from application to completion.
Of course, we keep you updated every step of the way. But our process is so efficient, you’ll have the keys to your new rental property before you know it.
As a new landlord, it’s also vital that you take out relevant insurance policies. In all the excitement of becoming a property owner, it’s easy to overlook the basics. Especially when they differ from traditional home ownership.
Our experts will ensure that you’re covered from the moment of completion right up until you cash in on your investment. With current demand, that should be many lucrative years from now.
It’s never been a better time for contractors to invest in buy to let property. Our advice, contacts and competitive mortgages can help you lay the foundations of your very own empire.
Here’s what you need to do next.
Simply call us on 0208 421 7788 or click on our Request a free quote button below and we’ll start searching for the best contractor mortgage for you.