Andy McOwat, consultant mortgage broker, looks at the options available to landlords looking for a buy to let mortgage on a rental property in Scotland.
First of all I’ll answer the question we get asked on a daily basis: Are there fewer buy to let mortgage options for properties in Scotland? The simple answer to this is yes.
The main reason is that Scottish Property Law differs to that of English Property Law, which means lenders have to have different processes in place in order to lend. For example when buying property in Scotland, surveys and valuations are carried out before an offer (known as a missive) is made, and then offers are made via a solicitor rather than an estate agent.
This can actually help the sale to complete as the purchaser already knows the details of the survey and has already incurred solicitor costs so is less likely to withdraw. Another advantage to a Scottish purchase is that, as all the initial work has already been done, the missives can be exchanged more quickly which reduces the chances of gazumping.
Of course there are also disadvantages to this system; primarily that the purchaser has to incur costs without knowing if his offer will be accepted.
However, I digress. The point is that many buy to let lenders do not have the systems in place to process an application for property in Scotland.
At present there are only a handful of buy to let lenders that will consider Scottish property and these options reduce even further when limited company borrowing is involved.
Currently there are four main buy to let lenders that will consider lending to a limited company on a property in Scotland:
All of which can only be accessed via intermediaries, including Mortgages for Business.
Pricing amongst these lenders is slightly higher than average but when you look at their more flexible lending criteria, landlords are usually won over. In fact, I often use these lenders not only on Scottish cases but also on more complex transactions throughout the rest of the UK as between them they offer the following options not always readily available with the mainstream lenders.
• HMOs and multi-units
• SPVs and trading limited companies
• Applicants up to 85 years at the end of the loan term
• Landlords with adverse credit
• First-time landlords
• Clients with income derived solely from rent
We source finance for properties in Scotland on a regular basis, so if you would like more information on the options available to you please do give me a call on 01625 416396.