Buy to Let Self Employed


to Lynton Mortgages Advisers,

where our dedicated specialists provide honest guidance to match you with the perfect lender, saving time and stress. We offer a fee-free, no-obligation consultation to understand your needs and recommend tailored mortgage options. While certain Buy to Let mortgages aren’t regulated by the FCA, we prioritize your interests and offer transparent guidance. Schedule your consultation today to secure your ideal mortgage solution.

What should you consider if you are self-employed and looking for a Buy to Let mortgage?

When it comes to applying for a mortgage for your own home, the focus is typically on your personal income. Lenders often use a multiplier of 4.5 times your income to determine your borrowing capacity, usually based on the average of your earnings over the last two years.

However, the process shifts when delving into Buy to Let mortgages. While some lenders may impose a minimum income requirement, typically around £25,000 in annual profit, others are more flexible, considering various forms of income.

Interestingly, for Buy to Let properties, the emphasis shifts towards rental income when assessing affordability. Lenders prioritize ensuring that the rent generated can comfortably cover the mortgage payments both presently and in the future. Consequently, your business earnings play a lesser role in the evaluation for a Buy to Let mortgage.

At Lynton Mortgage Advisers, we understand the nuances of these processes and are dedicated to providing clear and honest guidance tailored to your specific circumstances. Contact us today for a no-obligation consultation, and let’s find the right mortgage solution for you.

Should I Buy to Let as an individual or through a limited company?

As mortgage advisers, it’s crucial for us to highlight the pros and cons of each option, but we always emphasize that tax advice should come from a qualified accountant. Chances are, as a self-employed individual, you already have an accountant who can provide tailored guidance based on your specific situation.

When it comes to purchasing through a limited company, it’s important to note that it falls into a more specialized lending category, often resulting in slightly higher interest rates compared to personal ownership.

However, there are distinct tax advantages associated with the limited company route, particularly concerning recent legislative changes like section 24. For instance, under this new regulation, rental income taxed in personal names is calculated differently. In contrast, with the limited company option, you can treat mortgage interest as an expense, thereby reducing taxable profit.

This overview underscores the importance of seeking detailed advice from a tax advisor to fully understand the implications and benefits of each approach.

At Lynton Mortgage Advisers, we prioritize providing transparent and honest guidance to our clients. Get in touch today for a no-obligation consultation, and let’s navigate your mortgage journey together.

What is a special purpose vehicle or SPV?

An SPV, or Special Purpose Vehicle, operates as a limited company specifically established to acquire and manage properties. All income and expenses related to your properties are managed within this dedicated business entity, streamlining financial operations and providing a focused platform for property ownership.

At Lynton Mortgage Advisers, we believe in straightforward and transparent advice. If you’re considering setting up an SPV for your property investments, we’re here to offer guidance tailored to your individual needs. Contact us today for a consultation, and let’s explore the best options for your property journey.

Speak to an expert

Our team of seasoned advisers is here to assist you every step of the way, whether you’re purchasing or refinancing a home. We prioritize safeguarding your property and lifestyle while also saving you valuable time and effort. Our focus is on securing a competitive deal tailored to your needs, without any hidden fees or complications.Feel free to reach out for an initial fee-free, no-obligation consultation with one of our advisers to discuss the most suitable mortgage options for you.

How do lenders assess income for a self-employed Buy to Let mortgage?

As I mentioned earlier, when it comes to buying a property for your own residence, lenders typically assess your income over a two-year period and use a multiplier of 4.5 to determine your borrowing capacity.

However, the process differs for Buy to Let investments, where lenders focus solely on the rental income generated by the property. Some may still consider you for a Buy to Let mortgage if you have alternative sources of income.

Many lenders establish a minimum income threshold, usually around £25,000, to ensure you can cover the mortgage payments if your tenant encounters difficulties. Demonstrating an income above this threshold increases your chances of approval, provided the rental income also meets their criteria.

What is top slicing and how does it work?

Interest rates have seen a notable increase over the past year, making it a bit more challenging to secure the necessary lending for a Buy to Let property. This trend is particularly noticeable in regions like the southeast.

For those facing potential shortfall in rental income, there’s a solution called “top slicing.” This method allows lenders to consider your personal income alongside the property’s rental income during affordability assessments. If your rental income falls slightly short, lenders may leverage your surplus personal income to boost the borrowing amount.

This approach assures lenders that you possess additional income to cover any potential deficits in rental income, offering a practical solution for securing the necessary financing.

How can a mortgage broker help somebody that’s self- employed looking for a Buy to Let mortgage?

When investing in Buy to Let properties, building a strong relationship with a mortgage advisor is paramount. With a multitude of lenders available, securing a rough Agreement in Principle can demonstrate your financial readiness when making offers.

However, the ultimate factor lies in the rental income. While one property may yield £1,000 in rent against a £200,000 Agreement in Principle, another may only offer £600. A lender’s decision hinges on whether the rental income aligns with their criteria.

Maintaining a close rapport with your mortgage advisor allows for swift evaluation of property details to ensure the rental income supports your borrowing requirements.

Remember, your home may be at risk if mortgage repayments are neglected. Some Buy to Let mortgages operate outside the Financial Conduct Authority’s regulation. Taxation laws are intricate and subject to change, necessitating tailored advice from an accountant or tax specialist.


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