It’s no coincidence that almost any financial advice you might receive involves buying property as an investment. Real estate in its various forms is a great opportunity to create regular income and is generally a good long-term option. There are as many ways of investing in property as there are types of property available:

Understanding Buy to Let

If you are looking to take your first step onto the property investment ladder or have some money that you want to use to create a better life for yourself, then one path that’s open to you is a Buy-To-Let mortgage. There is more to this than simply finding a property in a good location with good schools, it’s important that you understand how a Buy-To-Let mortgage works and how it can have an impact on the property you purchase.

Studies have shown that, by 2025, almost half of the adult population under 40 years of age will be renting, rather than buying their own homes. As the UK population is due to increase to approximately 70 million in the next 10 years, the number of renters is only going to grow. With an average calendar month rental cost of over £900 in the UK, the increased popularity of this kind of mortgage is obvious as it is an incredible investment opportunity.

What is Buy to Let

When it comes to a Buy-To-Let mortgage, assuming you need to borrow the money to purchase the property, you need to understand what it is and why it’s different. Especially, if it’s new to you. So, let’s take a look…

It’s important to stress right up front that a Buy-To-Let loan is very different from the traditional mortgage/purchase transaction that most people use to buy their home. Instead of buying a property with a mortgage that you intend to live in, or at least resell after refurbishment, a Buy-To-Let mortgage is designed specifically to help you buy property as an investment. Once purchased, you then subsequently rent (or let) the property out as a landlord to the tenants. 

Investing using Buy to Let

Whilst the basic premise of a Buy-To-Let mortgage is similar to a traditional one (i.e. you borrow a large amount of money to buy a property and repay it over time), there are a number of key differences you should be aware of when it comes to investing.

These types of mortgages are usually only available for people who already own their own home (either outright or with an existing mortgage). Given that you’re using this as an investment, it’s important to stress that you will still be liable for the repayments. Obviously, if your property is occupied, then rent will cover your repayments, but if not, then repayments will still be required.

Landlord Responsibilities

Like any financial commitment, you need to go into this kind of arrangement knowing that there is going to be a risk. Becoming a landlord means there are some responsibilities and legal requirements that you need to be aware of. You are going to be liable for repairs and maintenance on the property as well as changes to how stamp duty works and future capital gains tax liabilities.

You’ll also need to research the market where you’re looking to buy. Are people willing to pay the rent you’re going to need to cover repayments? Also, look at the market value of your identified property in that area. There is always going to be a danger that the property goes down in value, rather than up.

Contact Us Today

Regardless of what you might see in movies or on TV, the realities of real estate investing means that it isn’t something to enter into blindly. Like any financial commitment on this scale, you need to do your research and make it specific to you and the location of the property you are buying. If you do that, we hope that your property is going to let you create the life you’ve always wanted. 

So, if you are looking to get a mortgage or advice on anything surrounding mortgages and properties, then Mortgages MK have you covered. Visit our contact page for more details or simply call us today on 01908 803362.

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In this quick guide, we’ll consider a few points about first-time mortgages, why they are sometimes tricky to arrange, and what you can do to navigate the process as a first-time buyer.

Starting Out as a First Time Buyer

There are more than a few challenges first time buyers will face on their route towards a fantastic new home. Sadly, all revolve around money. To be able to find good mortgages, you are going to need to save for a deposit. If you don’t have enough saved then you will limit the number of options you have for your mortgage

You should also bear in mind that all mortgage applications depend on your credit rating. If you have a poor credit score, you are less likely to be considered for the mortgage rates you want. This is because lenders want to make sure that you will pay any money back you owe in the time they require.

Therefore, you’re going to need to think carefully about how to raise a large enough deposit for the home you want, as well as how to get your credit rating healthy enough to impress lenders. Obviously, both of these things are not always easy to do!

Can First Time Buyer Mortgages Help You?

A first-time buyer mortgage is a special rate that is tailored towards those who have not purchased their first property. These rates are set up to ensure you get as much help as possible putting money forward. For example, a first-time buyer mortgage can take advantage of government Help to Buy schemes, which can help to make certain aspects of the process cheaper.

Advisors can recommend first-time buyer mortgages as they will help you to save for a deposit that works for you. You may not be able to get your hands on a mansion right away, but with a first-time buyer system, you can at least look at various options open to you, and where there is flexibility in the market.

Mortgages are more flexible now than ever before. A first-time buyer mortgage is an excellent way for first-time buyers to take their first step onto the property ladder.

Don’t Be Shy!

It’s easy to think that just because you’re a first-time buyer, you’re going to struggle to get good rates on mortgages and loans. This really isn’t the case!

Good mortgage lenders will offer first-time solutions to fit your needs, your income, and your credit score. Take a look around and get yourself on the property ladder as soon as you can!

If you would like to find out more about how we can help you, get in touch today on 01908 803362 or pop us an email at info@mortgages-mk.co.uk.

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Mortgages for the Self-Employed

Running your own business can be an exhilarating experience. It can also be a terrifying one. If you’re a sole trader or any company where you’re at the top of the chain, then having to do everything yourself can be daunting. At the very least, it’s a pull on your time-management skills when trying to find the perfect work/life balance. One of the many problems you need to overcome is when you’re looking for a mortgage.

Given the economic turmoil we’ve endured over the last decade, this new post-credit-crunch world has made it even more troublesome to get a mortgage if you’re self-employed. Let’s be honest, it has made it more difficult for almost everyone, but don’t be daunted. There is a way to either get on or even move up the property ladder for those of you running your own company.

Mortgage Myths

Let’s start by busting a myth or two. There’s no such thing as a ‘self-employed mortgage’. You apply for the same mortgage from the same lenders (for the most part) as everyone else, albeit with a few more hoops to jump through. Also, the concept of a ‘self-certification’ mortgage aimed specifically at self-employed people, freelancers, business owners and contractors has also gone by the wayside. So what’s left?

Most banks and building societies will consider you to be self-employed if you own more than 20% of the business from which you receive your main income. You don’t just have to be a sole-trader for this to apply. If you’re a partner, director or even contractor of a limited company, they will consider you to be self-employed if you breach that 20% mark and that company pays you your main salary.

Many self-employed people incorrectly think that because of their employment status they will be ineligible for a mortgage, so they don’t bother applying. That’s not the case. There are some specialist lenders that work with the self-employed, but also most of the high-street lenders will also consider you, providing you can provide at least two tax years of validated accounts (usually three) and have been trading for 3 years or more. As part of this, you’ll usually need a tax calculation from the HMRC for the current and previous tax years; either an SA302 form or a print-out from their website showing your income.

If you’ve got all the paperwork ready to go, how do you, as a self-employed person, go about getting the best mortgage? 

If you already have a mortgage and are looking to upgrade, speak to a specialist mortgage broker who will know the market and be able to help you. They will know your financial circumstance much better so may be able to offer you options others can’t. This will allow you to find out quickly if you can borrow the money you need without too much initial paperwork and they can even carry out an agreement in principle, so you know a lender will accept you.

Finally, if it’s something you’re working towards, then don’t minimise your income to pay less tax. As much as we’d all like to pay less, it will affect your ability to get the mortgage you want. Mortgages are huge commitments, for those who have to pay them back but also for the banks and building societies who lend the money. They’re rightfully careful who to give large amounts of cash to, but they should be. If you’re self-employed with strong, successful business in good-standing, then why wouldn’t they want to help you? It can be harder when you’re self-employed, but it’s far from impossible.

If you would like to find out more about how we can help you, get in touch today on 01908 803362 or pop us an email at info@mortgages-mk.co.uk. 

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What is a Mortgage?

Before looking into the how and whys, you need to understand the what…as in what is a mortgage? You should think of a mortgage as a loan that has been taken out to buy a property or land and will usually run for around 25 years but sometimes the term can be shorter or longer depending on the contract details.

The loan is ‘secured’ against your home until the point when it is paid off. If you found yourself in a situation where you were unable to keep up your repayments, the lender is then able to repossess your home and sell it to get their money back.

Why do you need a Mortgage?

So, hopefully, you now understand what a mortgage is. Now let us look at why you need one. When you have found a house that you want to purchase you will be required to put down a cash deposit which is usually at least 5% of the total property price.

The rest of the house value will, of course, need to be paid and this will be completed using a mortgage provided by a bank or building society. You would then need to pay the amount of the mortgage plus interest back in monthly instalments over an agreed amount of years.

First-time Buyer Mortgage

If you are looking for a first-time buyer mortgage, read on. Hopefully, you have already saved a good amount of cash that can be used as your required deposit, this will be the first step. Keep in mind that however much you save for your deposit; the remainder will need to be paid through the mortgage. 

As a first-time buyer, there are a few extra costs you may not be aware that you will need to consider. First, you need to have the funds available to cover the fees associated with property searches as you try and seek out your new home.

There will also need to be cash put aside for the cost of surveys, payable mortgage arrangement fees, not to mention stamp duty costs, solicitor fees, home insurance, and removal costs. There may be a few other costs that you’ll be faced with, depending on different factors such as who your mortgage provider ends up as, so you do need to keep a good-sized backup fund to cover this.

When you apply for a mortgage, the provider you select will look at your affordability as well as all the income you take home, including your annual salary. On top of this, your outgoings will be considered, so this would be bills that you pay, travel, shopping, etc. Your credit history will also be checked too.

Once all the above is sorted the lender will let you know the amount they are willing to lend you. Usually, this is done by getting an Agreement in Principle. This is a promise from the lender on how much they are prepared to give you, so the maximum mortgage loan you can have.

Here at Mortgages MK, we are the leading Mortgage advisors in Milton Keynes. We offer the full range of mortgages to our clients, from the first-time buyer to remortgages, we can assist you in finding the best interest rates for your next investment. If you would like to get a mortgage and need further information, please contact us on 01908 803362 or send us a message at info@mortgages-mk.co.uk.

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“The data released by the Nationwide this morning reports topline growth figures which continue to show modest increases, both on an annualised and month-on-month basis. Whilst not earth-shattering by any means, what is encouraging is that they do rather point towards a housing market that remains resilient amidst the ongoing political and economic uncertainty.

However, looking at the regional figures, we can see the nuanced picture that has been evident for quite some time is still very much the same. Half of the regions are still reporting over 2 per cent annual growth – in fact, Northern Ireland has seen over 3 per cent annual growth in the last month – whilst in other regions, particularly London and the South East, values continue to wane. The trend that Nationwide observes of a reducing number of vendors listing their properties over the past few weeks could well be a factor in terms of a lack of available homes providing support for values, particularly in areas where demand remains consistent. Whilst the UK housing market seems to be stuck in a holding pattern, it would appear that the fundamentals remain robust for the moment, even if many are delaying making a move until a Brexit denouement is reached.”

Read the full report here.

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