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Buy to Let Mortgages from Shire Direct...

Thinking about a Buy to Let mortgage? If you've been looking into the possibility of Buy to Let Mortgages and considering buying a property as an investment, then you've come to the right place!

Here at Shire Direct our Mortgage Advisors are professionally qualified and trained to provide you with advice and a recommendation on just the right buy to let mortgage product for you from our extensive portfolio of lenders.

Below we'll take a closer look at Buy to Let and how we can help with a Buy to Let mortgage. Not only will we look at aspects to take into consideration when buying a property as an investment by way of buy to let, but we'll also explore the help Shire Direct are able to provide when it comes to arranging Buy to Let mortgages.

Finding the right Buy to Let property

If you are new to the idea of buy to let mortgages and buying a property as an investment, we have put together a few pointers for you to take into account:

  • To be successful, you must first find the right property.
    It's a good idea to contact half a dozen letting agents for their advice on local demands for rented accommodation. Try to ascertain the type of and size of property that is in demand, together with an indication as to the likely rental income you can expect to receive.

  • The location of the property is vitally important.
    You should take care to choose areas where rental demand is likely to be at their strongest. These will generally be in locations with good transport links and amenities, and often may attract a specific sector of tenant. For example, if you are considering a buy to let in a university or college town, contact the Accommodation Department at the University to establish which areas are popular with the students, and the current going rate - they might even be able to find you students that require accommodation!

  • Legal Responsibilities
    You must also be aware of your legal responsibilities with regard to:

    • The safety to your Buy-to-Let property, both externally and internally
    • The compliance with fire regulations and the professionally qualified annual checking of gas boilers and heaters
    • Duty of reporting your profits to HM Customs & Excise (see Taxation notes below)

Buy to Let taxation

  • Taxation
    There are generally two taxes that you may have to pay:

    • Income Tax: which is payable annually and is based on the income from the property letting's after deducting expenses that you have incurred, and
    • Capital Gains Tax: which is payable on selling the property and is based on the sales proceeds of the property less the cost of the property.

    • 1. Income Tax (IT)
      There are generally two types of income from your tenants: rent & deposits. The rental income is taxed each year, based on the income that is due to you during a tax year rather than on the rent actually received.

      Deposits on the other hand, are not taxable if they are still repayable to the tenant. However once either part or all of the deposit is no longer repayable, because for example there has been damage to the property, then it becomes taxable at this point.

      There will be expenditure that you can offset against your rental income (allowable expenses), and those that you can't (disallowable expenses).

      Allowable Expenses:

      • Managing Agent's fees
      • Advertising the property for let
      • Repairs and general maintenance costs
      • Cost of services provided to the tenants, e.g. gas, electricity, water etc.
      • Buildings and Contents Insurance premiums
      • Interest paid on the mortgage to buy the property

      Disallowable Expenses:

      • Capital Expenditure on renovation work and improvements made to the property, e.g. installing central heating
      • Capital repaid on the mortgage taken out to buy the property
      • Costs incurred whilst the property is not available for letting
      • Costs of purchasing / selling the property

    • 2. Capital Gains Tax (CGT)
      The amount of gain subject to CGT is the proceeds from the sale, less the purchase price and costs that you have paid for on the property. These will include many of the costs that have not previously qualified for relief under the Income Tax (IT) rules, such as the costs of purchasing and selling the property, e.g. legal expenses, estate agents fees and stamp duty.

      Similarly, costs of improvements to the property, including renovation work, central heating, etc. that have not qualified for IT relief will usually be eligible now. The amount of CGT payable will depend on how long you have owned the property and whether you have at any time lived in the property.

You may also wish to take a look at our Mortgage Glossary page on Buy to Let and Tax for further information.

Other buy to let mortgage considerations

Let's have a look at some of the other things you may want to have a think about when it comes to Buy to Let Mortgages...

  • Do the sums!
    You may have found just the right investment property that ticks all boxes - the right location, the right type and size of property, local demand is confirmed as being conducive, and the rental income appears to be adequate - what else is there to consider?

    • How much deposit will be required - 5%, 10%, 15%?
    • What will be the cost of making the property presentable for letting?
    • What are the tax implications of the rental income, qualifying expenditure and selling the property in the future?
    • The attendant costs of purchase: solicitors, lender and broker fees, valuation fees
    • Furnished or Unfurnished
    • Insurance requirements: buildings and contents cover
    • Legal aspects: Short-hold Tenancy Agreements
    • Contingency Planning: how much will I need to set aside for periodic maintenance and refurbishment?
    • Will the rental income be sufficient to repay the mortgage payments?
    • The most appropriate mortgage and monthly payments

  • Logistics
    Remember, the location of your investment buy to let property is vitally important, not only to establish if there is a high demand for rental accommodation, but also the difficulties of managing it if you live some miles away!

Buy to Let mortgage help from Shire Direct

Once you have located the right area and the right property for letting, it's time to speak with Shire Direct. We will work with you to ensure that the most suitable mortgage product is selected, and that it meets your requirements and pocket both now, and into the future.

The first thing we'll do is ensure we understand your circumstances, needs and aspirations, whether you are dipping your toe into the buy to let market, or are gradually building up your property portfolio.

A Shire Direct mortgage advisor will also discuss the various options open to you and will carefully assess your circumstances, needs and aspirations, as well as exploring issues such as:

  • whether ownership should be single or joint (as it can be messy to change later on)
  • whether the method of payment should be interest only or capital repayment
  • other mortgage features you may require, e.g. fixed rate, flexibility etc.

So please don't hesitate to contact us if you think our skills in arranging this type of mortgage facility would help you.

Remember, our professionally qualified advisors are available on Freephone 08000 282 281 up to 10.00pm everyday, or you might prefer to enquire online at any time, and we'll be delighted to provide you with an in-principle decision - whatever your circumstances and requirements.

You'll find our service to be friendly, helpful and not the slightest bit stuffy. So please don't hesitate to contact us should you wish to talk through your buy to let mortgage requirements and options, naturally without obligation.

Enquire Online now, or call us today 08000 282 281 - our freephone lines are open 8am-10pm everyday! We'd love to hear from you!

The overall cost for comparison is 9.8% APR.
The actual rate available will depend upon your circumstances. Ask for a personalised illustration. APR variable and based on a usual case. Most customers are likely to receive a lower rate or the same rate as our overall cost for comparison rate - learn more about APR.

There are no upfront broker fees.
However, a fee may be charged on successful completion. An indication is that on conforming cases (straightforward applications with no or minimal adverse credit) a fee may be charged of up to 1% of the amount advanced, typically £795 and will depend on your circumstances.
For non-conforming cases (where case research and processing may be more complex due to adverse credit or unusual circumstances), a fee may be charged of up to 3% of the amount advanced, typically £1,995.

THINK CAREFULLY BEFORE
SECURING OTHER DEBTS AGAINST YOUR HOME.
YOUR HOME MAY BE REPOSSESSED
IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.

Adding existing debt to your mortgage will increase the repayment term and overall cost.

Shire Direct and Shire Direct Mortgages are trading styles of Shire Processing Centre Limited which is
Authorised and regulated by the Financial Services Authority in respect of regulated mortgage products and general insurances.
Registered No: 302389. Commercial funding and Secured Loans are not regulated by the FSA.
Licensed Credit Brokers. Consumer Credit Licence Number: 349999.

Shire Processing Centre Limited is registered under the provisions of the Data Protection Act by the Information Commissioners Office: Registration No: Z6795249. Registered in England & Wales. Company number: 2732202. Telephone calls may be recorded for training, monitoring and security purposes. All applicants must be aged 18-years or over.