Stricter regulation means that lenders are looking more carefully at your mortgage application than ever before, so it makes sense to be prepared. Here are my tips on what you can do to ensure that your buy to let mortgage application isn’t held up but it’s worth noting that much of the advice stands for all types of mortgage including residential and commercial.
1. Who or what is the borrower?
Before submitting your application, decide if you are going to borrow personally or through a limited company. For many higher rate tax-payers, a limited company structure is likely to be the preferred option but we would always recommend that you take specialist tax advice first. If you want to remortgage to “transfer” a property from personal to corporate ownership, it’s worth noting that this will be treated as a sale (at open market value) which will trigger all the usual sale costs plus the stamp duty surcharge and potentially capital gains tax liabilities.
The application process for limited company buy to let mortgages is the same as for personal applications, so be prepared to able to justify everything that you state on the form if requested to do so.
2. Is there anything unusual about the property?
Let us know in advance if the there is anything unusual or quirky about the property as this will influence the choice of potential lenders. For example, is it in good condition, of non-standard construction, above a take-away or close to commercial property?
3. Get certified copies of documents
Take a copy of your passport and/or driving licence and get the Post Office or your solicitor to certify this as a true copy and a true likeness. All lenders will ask to see these documents as proof of your identity when processing your mortgage application.
4. Gather all supporting documents
Start collecting or have ready the supporting documents that the lender will need to see in support the mortgage application. Each lender has its own specific requirements and we will send you a tailored list but it is likely to include:
- Proof of identify (as per point 3)
- Proof of residency – a recent utility bill or bank statement.
- A full schedule of existing properties held including mortgages and rental income
- Copies of latest 3 months’ bank statements. Internet statements are acceptable if they show the bank name, account name, number and sort code.
- Evidence of personal income - usually 3 months’ payslips and P60 if you are employed. HMRC’s SA302 (statement of income) if you are self-employed or already own buy to let property.
- Proof of deposit (for purchases). Not just a credit balance figure on a statement as the lender will need to see the actual source of the funds.
- A copy of the current tenancy agreement (for re-mortgages).
5. Complete the application form fully
As they say, the devil is in the detail. We’ll happily help you fill in the form but if you want to complete it yourself do ask us if you’re unsure of anything. Ideally, save a copy of the completed form on your computer as well as emailing it to us. Send us a scanned copy if you can.
6. Sign the application form!
You’d be surprised at how many times people forget. If you email us the application form, some lenders will also require you to provide the original with your inked signature but we’ll let you know
7. Choose your solicitor carefully
When choosing a solicitor to carry out the conveyancing it’s worth remembering that most lenders require the firm to be well established and have at least two partners but some will insist on four. Some lenders provide a free legal transfer service for remortgages. Others will use your solicitor (known as dual representation). For limited company buy to let applications some lenders will use their own solicitor to act for them while your firm will act for you (known as sole representation). We can discuss this with you and easily provide a competitive quotation for legal fees to see if you can save costs.
8. Keep in touch
We will liaise with you throughout the mortgage application process and you will have direct access to your mortgage broker and dedicated case manager who will administer the paperwork. You will be provided with regular updates but please do let us know if your circumstances change or if you have any concerns or questions or worries. The sooner we know, the sooner we can address them.
Got a question? Start an online chat with us or call us today on 0345 345 6788.
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Buy to let fees and the application process
10th January 2017