One of the big, big changes in property over the last 20 years is that it is now so easy to find finance for your properties. When I first started 20 years ago, buy to let mortgages had only just come in. Nobody quite knew what they were or how they worked. And it took a bit of time before it built the momentum that we can see today.
Prior to that, if you were just a private individual who wanted to invest in property it was very, very hard to get any money at all, unless you were very wealthy. If you were very wealthy you probably didn’t need to borrow the money, one of those strange ironies.
But now, of course, anybody who wants to get into property pretty much can. Even people with County Court Judgements can go out and get a buy to let mortgage because there are lenders out there who will lend to you.
There’s plenty of products out there, in fact there are so many products that one of the traps you don’t want to fall in to is trying to work it all out for yourself. I meet new investors who tell me that they are going to go off and they are going to go online and find their lending products. Don’t do that.
At the time of recording this there is about 2,000 different buy to let products which are available provided by about 30- 50 different lenders. You cannot keep tabs on that. You cannot know what’s on the market and some of the products you can only get if you go through a broker anyway so you should always be using a good broker.
Here is some of the stuff we need to think about when we’re getting our buy to let mortgages. One of the main things is that most buy to let lenders are going to expect the property to be habitable. Unfortunately, there is no one standard definition of what habitable actually means.
For some it can be that the properties completely trashed but it’s got running water and a working toilet. For others it has to be almost pristine. So, you need a good broker who knows what the criteria are of the different banks so they can take you to right lender.
Just to add another level of complexity, it’s not just the banks criteria as to what they mean by habitable, it can also come down to what the individual valuer thinks on the day, and how they describe and report the properties. So that can be very frustrating.
The reality is that if you are going to go into property full time or professionally, not even full time but just professionally, and start building a portfolio, you probably want to have a plan B up your sleeve just in case lender A doesn’t lend you the money because you fall foul of their criteria. You want to be ready to go with lender B because they might be more flexible but, of course, a good broker is going to be able to help you with this.
Peter
Peter Jones
(ex) Chartered Surveyor, author and property investor
https://thepropertyteacher.co.uk
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