Lenders had made significant moves towards requiring borrowers to have a minimum income of £20,000 to £35,000 in order to be accepted for a buy to let mortgage. These minimum income requirements were a big change as in the past there were many self cert buy to let or no income buy to let products on the market – lenders looked only at rental income to assess cases. Luckily as competition is ramping up in the market this is starting to change for the better.Naturally the reasons for requiring an income make sense when superficially analysed – people with jobs can cover rental voids more comfortably than those with very low or no income. The problem with this analysis is many amateur landlords don’t plan for voids/save money anyway and have little of their monthly salary left at the end of each month in any case. More experienced landlords may choose to run their portfolio for a living and therefore don’t meet the criteria of ‘having a job’ but often have better rent guarantee insurance in place as well as managing their tenant arrears more effectively.
The Move To No Income Buy To Let
Lenders are starting to understand the benefits of working with professional landlords. Kensington was the most recent lender to change tack and accept that professional landlords who can show they are managing a portfolio of properties shouldn’t need to provide evidence of a ‘day job’ as well and have no income requirements on their buy to let for such experienced landlords. Aldermore Commercial (a specialist arm of Aldermore Bank) also have no set minimum and base the rate, rental cover required and acceptance on the experience of the landlord. Our advisers work closely with these two lenders and early indications are that their more flexible criteria is having a huge impact.
On top of these specialist lenders The Mortgage Works has for a long time had a genuine no income required buy to let mortgage. Some smaller local building societies have had to adjust their criteria to compete – often the funding situation in the UK currently forces them to compete on criteria as rate competition becomes too heated for them. This is great news for buy to let landlords as it significantly improves their access to funds as many societies they may not even have heard of move aggressively in to the buy to let sector.
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Types of Applicant Acceptable To No Income Buy To Let Lenders
The most common case we look at by far is that of a husband and wife team looking to purchase in the name of the lower income earner. Sometimes this applicant is on a very low salary or even not working as a result of their decision to stay home and look after their young family. These cases are very straightforward for us to place – our lenders understand that a husband is, for example, unlikely to let his wife’s property be repossessed if there’s a short rental void. Usually these applicants are home owners and that is an important factor in obtaining them their first buy to let mortgage.
Many other types of applicant are, of course, acceptable. Experienced professional landlords, those who have recently become self employed and many more may wish to become involved in the buy to let market and we can help.
Plan Carefully – The Risks To Low Income Landlords
As a landlord you have a responsibility not just to yourself and your family but to the families and people who rely on you for a roof over their heads. Keeping your mortgage commitments up to date and your properties in a good state of repair is essential to your successful future as a landlord. If you would find yourself struggling if one of your properties was to fall vacant for a few months take out rent guarantee insurance now and protect not just yourself but all of your other tenants. If you won’t have an income to cover any ad-hoc costs make sure you save some of your profits to re-invest in the buy to let business.
To discuss any of the products and lenders discussed in this article or request a buy to let quote now.