Whether you are starting or expanding your property portfolio, we are here to help you get the right mortgage deal with our range of buy-to-let mortgage products.
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
You could apply for a buy-to-let mortgage if:
You can take out a maximum of three buy-to-let mortgages or borrow up to £2 million across the Lloyds Banking Group. This includes the following brands: Birmingham Midshires, Halifax, Bank of Scotland, Intelligent Finance, Lloyds Bank, The Mortgage Business (TMB) and Scottish Widows Bank.
It’s important that you can afford your personal commitments so that the rental income can be used to cover the Buy to Let mortgage and other property costs.
In some cases we’ll also look at your personal income, and may take into consideration the additional cost of an increased tax liability for some customers as a result of changes in tax legislation. These changes will begin to take effect in 2017 and be fully implemented by 2020 and, as a responsible lender, we must consider how they might affect the future sustainability of your borrowing.
You can use our Mortgage Calculator to view our current rates and compare our mortgages. By providing your property value and mortgage amount we can show you the deals that match.
We currently only offer fixed rate mortgages. Variable rate mortgages, which include tracker mortgages are not available.
A buy-to-let mortgage is a loan you can take out to buy an investment property that you or your family won’t live in and that you intend to rent out to tenants. We call this business buy-to-let.
No, these products are not available to first time buyers. Taking out a mortgage is one of the many risks of investing in buy-to-let properties. So before you enter the market you should be an experienced house buyer and have fully researched investment properties.
The most you could borrow is linked to the amount of rental income our surveyor thinks you could earn. The annual rental income must equate to a minimum of 125% of the annual (interest only) mortgage payments based on the higher of a notional interest rate of 5.5% or the initial rate for the mortgage deal.
We will consider the tax liability when calculating the rental cover and maximum loan. For higher and additional rate tax payers, the calculation will be based on 125% of the rental cover after any extra liability has been taken into consideration.
Age - You must be at least 25 years old and not over 75 years at the end of your mortgage term.
Deposit - Minimum 25% (property value or purchase price, if lower).
Maximum lending - You can borrow up to £2 million from Lloyds Banking Group across a maximum of three buy-to-let mortgages. The maximum loan size on a single buy-to-let property is £1 million.
Current Residential Status - At least one person named on the loan must currently own a property in the UK.
Buy-to-let mortgages are secured against the rental property, so it's important that you keep up your repayments. If you don't keep up your repayments there is the risk that your rental property could be repossessed.
Our current mortgage deals are based on how much mortgage you need in relation to how much your property is worth. This is known as your loan to value (LTV) and it's expressed as a percentage figure. If you check all our current rates there'll only be certain mortgages which fit your loan to value band.
You may be charged a mortgage account fee which is an interest-free fee charged on new mortgage completions. Depending on the mortgage product, there may be a product fee to pay. You'll need to check our current rates for full details.
Any product fees can usually be added on to your mortgage on completion. There could be other charges and standard costs which you may have to pay during the life of your mortgage. You will be charged interest on any fees, charges and standard costs added to your loan.
Tenants - think carefully about the type of tenant you want to attract e.g. young professionals, families or sharers. Considering this may help you to decide on the type of property you purchase and its location. The property should be let on a single assured shorthold tenancy (in England and Wales), a short assured tenancy (in Scotland) or a private tenancy (in Northern Ireland). A maximum tenancy of 3 years is acceptable when the tenancy is in the form of a Department for Communities and Local Government (DCLG) model agreement of September 2014 (or as amended) or the Scottish Equivalent or such other replacement tenancies as may be prescribed by legislation from time to time.
Location - do your research and visit lots of different areas. Location is an important consideration and will often determine the type of tenant you will let to. Don’t necessarily buy locally to your home.
Think about prosperous towns which might attract a higher demand for rental property. Once you have chosen an area consider the locality, think about transport links, parking, shops, schools and other local facilities – pick the brains of letting agents for information about areas where properties may be easier to rent.
Condition of the property - if you are buying a property which needs improvements restrictions could be placed on the amount you can borrow and it could also delay how quickly you can let the property out. Can you afford the mortgage payments during the renovation period?
Rental income - do your homework, talk to local letting agents, check the local press to find out comparable rental values. The mortgage valuation will include an estimate of the rental income of the property on an unfurnished basis. But remember, there are no guarantees of what rental income you will get or if the property will rise in value over time.
You will have to declare rental income on your tax return so you should keep a record of rental payments received and any associated expenditure for the rental property. As a result of tax legislation which will begin to take effect in 2017 and be fully implemented by 2020, finance costs will not be tax deductible but tax relief can be claimed at the basic rate.
We cannot offer tax advice and you should refer to an accountant who will be able to ensure that HMRC are properly advised and all allowable expenses and allowances are correctly identified.
When Insuring your buy to let property you may need to think about specialist Landlord Insurance to provide key areas of cover:
Buildings insurance - This provides protection for your property against damage like broken windows, flooding or subsidence.
Landlord contents insurance – Protection for household items that you provide for your tenants.
Landlords’ liability - As a property owner, not actually living in the premises, you need insurance cover in place in case of an injury to third parties linked to your premises.
Rent cover - Unforeseen events, like fire or water damage, may mean tenants stop paying rent until the damage is repaired. This can significantly affect your cash flow. Keep your finances on track with a policy that covers these unexpected gaps in your rental income.
Some mortgage companies insist that you have a dedicated landlord insurance policy in place as part of your buy to let mortgage contract. It’s not compulsory to buy insurance from your mortgage provider.
Find out more about Lloyds Bank Landlord Insurance here.
Use our online form to book an appointment with a mortgage adviser.
Talk with an expert and apply by phone
Lines are open from 8am-8pm Monday to Friday and 9am-2pm on Saturdays. We’re closed on Sundays and Bank Holidays.