Buy to let mortgages & commercial investments

Frequently asked questions for new investors;

• Can my first mortgage be a buy to let?
  • Yes – some but not all lenders will approve a first time buyer.
• Can I live in my buy to let?
  • Yes – but it might change the status of your mortgage so discuss your plans with your advisor at the earliest opportunity.
• Can I rent out the property I live in now?
  • Yes – this is called a consumer buy to let and can be arranged with many buy to let lenders.
• How much do I need to earn for a buy to let mortgage?
  • There’s no minimum earnings limit, so long as you’re able to cover your outgoings with your current income and you don’t have to rely on the property to prop you up, it’s fine.
• How hard is getting a buy to let mortgage?
  • It can be a bit more complex to set your buy to let mortgage up than a residential mortgage, after all this is a business investment. Our experts deal with this every day and will make the process as easy as possible for you.

Frequently asked questions around growing a portfolio

• How can I improve the properties in my portfolio?
  • With the government legislating to ensure let properties are energy efficient and the general maintenance required on your properties cashflow can sometimes be an issue. Fortunately, with our access to short term lenders and second charges, there’s always a solution even if you’re tied into long fixed rates. 
• Can I give up work and live off the rental income?
  • Yes! Once your portfolio is big enough to support your needs then why not? There are plenty of buy-to-let mortgage lenders who will look at your overall financial position and do not require a certain level of employed earnings.
• What if house values drop?
  • Don’t sell! House price corrections are only an issue if you have to sell during that period. A diverse portfolio will help you to ride recessions or further changes to benefits and keep the rent flooding in. If house prices dip and you have the ability then it’s a great time to buy!

Frequently asked questions about HMOs

• What is an HMO property?
  • A house of multiple occupation is becoming more commonplace as housing costs rise. The definition of an HMO is three or more households living in a property with some shared facilities. (Kitchen, bathroom or toilet facilities). If each tenant has fully private facilities then the property becomes a “multi-let” or is a block of flats!
  • A large HMO is where five or more tenants share and will require licensing.
  • Local authorities define their own licensing requirements so it’s important to understand these before a purchase. Conversions to HMO without the correct permissions will be significantly down-valued and a purchase might be aborted with significant costs to the buyer.
• What’s the difference between a commercial valuation and “bricks and mortar”?
  • HMO properties are sometimes valued based on rental yields, this is referred to as a commercial valuation. Some lenders will accept this as the value for lending if certain criteria are met;
    • The property is in an area where other HMO development would be restricted, by “Article 4” or other means.
    • The conversion of the property is such that it would not be easy to replicate in the immediate area.
    • Lenders may also look at property usage and values.
  • In cases where these criteria are not met then the lender will lend against the standard value of the empty property (vacant possession) and some lenders might reduce that by the amount required to convert the house back to standard family usage.
• Can I convert a property to an HMO?
  • Yes – Your Acorn.finance advisor will be able to help here, so long as you check the local licensing requirements a bridging loan will help to fund the purchase and the conversion then refinance straight away onto a long term mortgage.

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