Your Zingy Top Ten Tips for Buy-to-Let Properties

2016 was certainly a bumpy year for buy-to-let investment but I reckon, with the current economic uncertainties, we’re getting quite used to a bit of a rollercoaster ride in various areas of the financial market. The good news is that, in 2018, buy-to-let is now officially booming, especially in seaside towns such as Southend. You heard it here first.

Here at Zing, a leading buy-to-let mortgage broker (as well as every other kind of mortgage under the sun), we’re pleased to pass on our Top Ten Tips for Buy-to-Let. This means that if you decide to launch into the rental market, at least you’ll do it with your eyes open. There are upsides and possible downsides, needless to say.

First, let’s explore what happened to make buy-to-let less favorable. The esteemed governor of the Bank of England, Mark Carney, was concerned that buy-to-let investment was a serious threat to the UK housing market. He issued tougher rules for mortgage companies and other lenders. There was a 3% surcharge on stamp duty for buy-to-let properties as well as second homes. Then lenders tightened their belts ahead of a reduction of tax relief on mortgage interest. Landlords’ ‘wear and tear’ allowance, which enabled them to claim expenses for upgrading their properties, was removed. Last but not least, there was the referendum and all the economic wobbles that caused, either in reality or in public perception.

Buy-to-let is tougher than it once was, for sure. However, with low-interest rates and good mortgage deals to be had these days, it could be an effective way to bring in a regular income for you. Investing in bricks and mortar certainly feels somehow solid and trustworthy against other more airy-fairy deals like stocks and shares. Rents are rising and will continue to so with inflation on the horizon. Despite this, there’s still a huge demand for properties to let.

Top 10 Buy to let facts

So here goes with the Top Ten Tips:

1. Research, research, research

Not just the area, but the financial implications. In your circumstances, other investments might be better for you – like a high-rate savings account. Think about the risks as well as the expected gains. If you have to take out a mortgage and pay a hefty deposit in order to purchase a property and then house prices fall, can you cope with the hit? Ask advice from people with experience—and you could start with us!

2.Do your sums

Get yourself a notebook and pen, then list ALL the outgoings against the rent you’re likely to achieve in the area you’re considering—including maintenance costs. And what if your property is empty for a few weeks?  A rule of thumb is to have rent that covers 125-150% of your mortgage repayments

 3.Choose a good area

Good areas, in this context, are simply those where people want to live, for whatever reason. Good infrastructure for commuters, highly-rated schools, a university, a holiday destination… Speaking as a Southend-based company, seaside towns are very popular with property investors, with holiday rentals and accommodation for seasonal workers in demand. Remember overall rental yields might be compromised if the property can’t be let throughout the year. A couple of years ago, Southend was Number One in the country for return on investment outside London, with a whopping 14.7%. Hoorah for Southend!

4. Look out of your area

While it’s convenient to have your buy-to-let property close to hand, your town may not be the best place to invest. Think about casting your net wider to a university town, for example, or an up and coming area of a city. Here, there are usually lots of run-down properties that you could buy to renovate. Remember to factor in the cost of refurbishment, though.

5.Get the best mortgage on offer

Perhaps we should have put this top of the list? We can talk you through every available deal. Once we know your circumstances, we can help you to make an informed decision about the best buy-to-let mortgage for you.

6. Don’t be afraid to negotiate

You’re in a good position to buy because you’re not relying on selling one property to buy another. You won’t be desperate to find somewhere to live for yourself, either, so there’s less risk of the deal falling through.

7. Think about your prospective tenant

It’s not a property for YOU—it might be for students, or young professionals, or families, so decorate accordingly, even if it’s not to your personal taste. Don’t spend too much. Practical, durable and neutral is best because your tenants will want to add their own touches to make it feel like home—and then they’ll stay longer too!

8. Consider limited company buy-to-let

Could this be the solution to stop you, as a landlord, from losing tax relief? Probably not, unless you’re buying four properties or more—but we can advise.

9. Think about buy-to-let remortgage

There are lots of reasons why you might want to remortgage your buy-to-let property, from raising capital, to changing terms, to swapping mortgages to gain the best rates. Again, we know all the wrinkles…

10. Contact Zing Mortgages!

It’s all a bit mind-boggling, this stuff about buy-to-let, isn’t it? But we understand all the ins and outs and will be able to help you to decide if it’s for you, and if it is, find the best way to go about it.

Zing Mortgages advice equals happy buy-to-let landlords, with eyes wide open!

Complex Income and Mortgages

Do you consider your income complex?

In today’s world, you’d be surprised to discover just how many people do. The number of people working in more traditional nine to five jobs is shrinking on an annual basis. More people now have more than one job or have opted to become self-employed, meaning that actual earned income can be an accumulation of salaries.

Even though job structures have evolved so much over the years, there are still plenty of mortgage lenders on the high street who won’t consider applications from people who don’t receive a regular salary. This could be due to the potential risk involved in lending to someone who may not have a consistent and traditional income structure.

complex income

So, what exactly does complex income mean?

In a nutshell, income is classed as complex if it’s made up of various different sources and/or fluctuates on a monthly basis.

For those who earn their money through a combination of different means such bonuses,, commissions, pensions, or overtime, it can be a little more difficult to gather all the proof of total income when applying for a mortgage.

Though it may be a little tougher, it is definitely not impossible to get a mortgage with an atypical income type. As someone with a more complex income structure, you’ll want to ensure that all your sources of income are shared with lenders. They need to understand ALL the taxable income you receive so you can be accessed fairly & gain access to the full amount available..

There are different requirements for different types of complex incomes.

Read on for our list of the different types of incomes classed as complex, and what you need to do for your mortgage application if you fall under any of these:

Overtime bonuses and/or commissions

If you regularly receive overtime, bonuses or commissions on top of your basic salary, you’ll want this to be accounted for in the affordability assessment. You’ll need to show mortgage lenders a minimum of your last 3 payslips and P60. This may be extended if the payments aren’t regular & where it’s an annual payment you’ll probably need to prove the payment has been received over the past three years to prove it’s not a one-off payment. Every lender will assess differently, but many will let you use the full amount while others may work out an average to decide how much you can afford to borrow.

Benefits and child maintenance

If you receive any sort of government benefits such as child maintenance on top of your regular income, these could potentially support your mortgage application depending on the lender. These can include anything from disability benefits to child tax credits.  You’ll need to provide proof from the relevant authorities along with bank or building society statements to allow inclusion in the assessment.

Keep in mind that if you don’t have an income other than benefits, most lenders may not consider your application. You’ll need to reach out to those lenders that are open to it.

Freelance income from self-employment

For those of you who are self-employed, you will be able to find many mortgage providers that are willing to lend to you, though there will be more paperwork involved! You’ll need to show your latest 2 to 3 years accounts and earnings. Some lenders will work with just one year’s accounts for those new to self-employed but a rate penalty will probably apply.

More than one source of income

If you have a second job which is giving you a regular source of additional income, this will be considered by mortgage providers when they’re carrying out the affordability assessment. As long as the second job has been worked for more than 12 months & it’s seen to be achievable going forward.

Pensions

For those mortgage applicants that are currently living off their pension income, getting approved can be quite tough. However, if you have a good credit history and a larger pension income, there are some lenders out there who may be willing to consider your application.

You’ll need to provide all pension-related documents as proof, such as the statements of your annual pension income.

Rental Income

Proof of rental income is usually used by a lender to confirm that the rental property is self-funding. Rarely is the excess income used as part of your affordability assessment. However, that said, some lenders will use the excess income as part of your affordability.

Conclusion

We hope the above list has helped you understand a little bit more about complex mortgages. Hopefully, it has also made clear that though you may have a few more forms to fill and paperwork to show, many lenders will accept your mortgage application with the necessary supporting proof.

Though this list covers the most common types of ‘complex’ incomes, there are many other income structures out there. To increase your chances of getting a complex income mortgage offer, we’d recommend seeking assistance from a mortgage specialist. An independent mortgage adviser will be able to help you ensure all your income is accounted so that your affordability assessment is fully accurate.

For further advice or to arrange your appointment please contact ZING on 03332 414113 or email sales@zing-mortgages.co.uk