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Guide to buy-to-let – part 1

Published by FTAdviser | Apr 26, 2012

Like any form of investment, buy-to-let comes with no guarantees. For those who have more faith in bricks and mortar than stocks and shares, mortgage advisers can help them secure the best buy-to-let deal.

The first of this two-part guide tackles the different types of buy-to-let mortgages, the pros and cons of such deals and how to source the best loan.

Answers supplied by Charles Haresnape, managing director of Aldermore Residential Mortgages, Kevin Purvey, head of national accounts at Coventry Building Society, and Phil Cliff, director of retail assets for Abbey for Intermediaries.

  1. Q: What is a buy-to-let mortgage?

    A buy-to-let mortgage is a business loan and not a personal loan, according to Charles Haresnape, managing director of Aldermore Residential...

  2. Q: What are the different types of buy-to-let deal?

    As with any mortgage, Phil Cliff, director of retail assets for Abbey for Intermediaries, said borrowers should consider their risk appetite.

  3. Q: What are the pros and cons of buy-to-let deals?

    Many landlords opt for interest-only mortgages in order to maximise their profit margin, according to Aldermore Residential Mortgages.

  4. Q: What are the FSA rules for advising on buy-to-let?

    Currently most buy-to-let mortgages are not regulated by the FSA, but some lenders will only deal with FSA-registered brokers.

  5. Q: Do I have to explain the risks of being a landlord?

    As with any commercial activity there are risks associated with being a landlord, says Aldermore Residential Mortgages.

  6. Q: How can I source the best deal?

    Brokers have the option of using sourcing systems or they can go via a network, a mortgage club or a specialist buy-to-let distributor.

  7. Q: What information will the lender require?

    In general terms lenders will require very similar information to that required for a residential mortgage.

  8. Q: How can I make sure my client gets a decision quickly?

    Some lenders have developed buy-to-let systems to keep intermediaries informed at every stage of the process.

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