It is now possible to obtain an income supported commercial mortgage for buy-to-let landlords to purchase property, a BridgingAndCommercial.co.uk article from December 2017 notes.
Most buy-to-let mortgage lenders base their lending decisions on the amount of rent the property will generate. Many lenders want rents to cover 125% to 145% of the mortgage payments before they will accept a loan application. They do not take any other income from landlords into consideration. This can exclude many landlords.
If a landlord wants a commercial mortgage over a short period and has other income to pay the higher monthly repayments, then rents alone will not cover 125% of the repayments. Some landlords have formed limited companies to purchase property as companies do not face the same restrictions as individual landlords.
Landlords that can show that the rents, plus other income sources, can easily cover mortgage repayments can now obtain commercial mortgages. A commercial mortgage broker will be able to perform the initial assessment on whether the borrower can afford the loan, and then find a specialist lender that is prepared to take into account both rental and other income received by the landlord.
Loans can be used for property purchases, remortgages or to raise extra capital.
The buy-to-let market has faced a difficult year, with landlords faced with higher costs from increases stamp duty and tax benefit decreases. Any move to make life easier for them is welcome. Considering a landlord’s total income could make loans less difficult to obtain.