Guides

House in Multiple Occupation (HMO)

If your property will have multiple occupants, you must check to see whether you require a license (www. propertylicence.gov.uk). You will find that this will limit the number of lenders willing to consider your application. Some Buy To Let Mortgages are not regulated by the Financial Conduct Authority. House in Multiple Occupancy mortgages are not regulated by the Financial Conduct Authority.

Interest only mortgage

With an interest only mortgage, your payments to the lender cover only the interest on the loan (i.e. they do not repay any of the capital). The total amount of your debt does not reduce over time and the full amount of the loan still has to be repaid to the lender at the end of the term, so you will need to ensure you have that money ready. So you can make this final payment, you can invest so that you generate enough capital to repay the loan at the end of the term. If you choose to invest, […]

Leasehold

A leasehold building means you have permission to use the property for a certain term, as agreed with the freeholder who owns the land. Typically this applies to apartments, where the freeholder will be responsible for maintaining the common parts of the building (e.g. entrance hall, staircase, roof), for which the leaseholder pays ground rent.

Legal fees

When you buy a property there is legal work that needs to be done. You will often hear this called conveyancing. You will probably use a solicitor to do this work for you although you can use a licenced conveyancer. Your legal bill will be the fees for the legal work plus other expenses that your solicitor has paid on your behalf, such as searches and Land Registry fees. You may see these additional expenses described as disbursements. Some remortgage deals may include free conveyancing, otherwise expect to pay around £500 + VAT for the legal work plus the cost […]

Letting agreement

The type of tenancy agreement will influence the number of lenders who will consider lending to you. A six month assured shorthold tenancy agreement (AST) is acceptable to most providers. Your choice will narrow if you are considering letting to a local authority, a company or housing association. Some Buy To Let Mortgages are not regulated by the Financial Conduct Authority.

Let-to-buy

A variation on a theme, where you let the home you are currently living in, so that you can facilitate the purchase of your new home. You need to obtain permission to let from your current lender, and they may not agree depending on their appetite for risk. They may also alter the interest rate you pay. You may need to review the market for other options. Your let-to-buy is then treated like a traditional buy-to-let application, and your new home purchase would be a related, but isolated, application. The Financial Conduct Authority does not regulate Let to Buy mortgages. […]

Life cover

This is cover that pays out on death. Some plans pay upon earlier confirmation of a terminal illness where the prognosis is death within 12 months. It can pay out as a lump sum, or as income for a set period. Cover can last for a set term called Term Assurance, or can last throughout life, called Whole of Life. The amount of cover can remain the same or increase / decrease annually. Level term assurance stays the same throughout. Decreasing cover is sometimes used to cover a reducing debt, such as a repayment mortgage and usually assumes a given […]

Limited company

Whether you choose to buy the property in your own name, or that of a company, will have tax implications for you. You may also find that some lenders will not lend to a company, or still require a personal guarantee. You should seek professional advice from a tax specialist. Some Buy To Let Mortgages are not regulated by the Financial Conduct Authority.

Loan-to-value (LTV)

Compared to residential lending, loan- to-values are typically lower (75%) to accommodate the perceived higher risk, and need budgeting for in your deposit.