Frequently asked mortgage questions

A buy to let mortgage is a loan secured on a residential property with the specific aim of letting it out to tenants.

Yes, you will need a buy to let mortgage in place to let out your property to tenants. If you let out your property on a residential mortgage without your lender’s consent, you may be in breach of your mortgage conditions. Get in touch with one of our expert brokers to discuss your options.

The loan to value (LTV) is how much you are borrowing as a percentage of the value of the property in question. Typically, landlords secure buy to let mortgage rates at 75% LTV.

Your gross rental income is the total amount your tenant pays before you subtract any expenses. Your net rental income is your true earnings after you’ve accounted for any fees, running costs, or taxes. To calculate the rental yield, divide your gross annual rental income by the property value, then multiply by 100.

The ‘ICR’ is part of a lender’s affordability assessment and is frequently referred to as part of a lender’s RTI (rent to interest) calculation.

RTI calculations for a five-year fixed rate are set at 145% at the ‘pay rate’ (the actual mortgage rate) for individual borrowers and 125% for Limited Companies. The reason it's lower for Limited Companies is because they generally pay a lower rate of tax. Therefore, lenders underwrite the application knowing you can afford more than if you were borrowing in your own name. Please seek professional tax advice before making any property investment decisions.

Lenders use these RTI checks to assess how affordable a mortgage product is for your current circumstances. It ensures the rental income comfortably covers the monthly mortgage payments and any additional associated costs.  

Buy to let mortgage lenders typically prefer borrowers to put down a 25% deposit. If you have a minimum deposit you can get BTL mortgages with a 15% deposit; however, there are fewer mortgage products available, and the interest rates are higher. Overall, rates are more competitive when you can put down a deposit of 25% or more. 

A residential mortgage is a loan secured on a property for you to live in, whereas a buy to let mortgage is a loan secured on a property you let out or rent to tenants Buy to let mortgages tend to incur higher fees, and mortgage interest rates are typically higher as well, as they are more specialist mortgage products. 

Furthermore, buy to let is not a regulated industry, whereas residential mortgages are. As such, you only have access to the Financial Services Ombudsman and Financial Services Compensation Scheme when applying for a mortgage for your own home. This is because buy to let mortgages are considered to be business transactions, and therefore are not eligible for the FCA’s consumer regulations.  

Arrangement fees are the amount a lender charges to set up the mortgage for you. You usually pay this once the mortgage application completes, although some lenders let you add it to the loan. However, remember that you'll pay interest on the fee if you add it to the loan. 

The product fee can be a percentage of the loan or a fixed amount. Some lenders may charge higher arrangement fees to bring down the interest rate. 

Whether a fixed or variable-rate mortgage is better for you will depend on your circumstances. Speak to our expert brokers to discuss your options.

Here are some of the benefits of using MFB to secure your buy to let mortgage: 

1. Full market choice

Working with a whole-of-market broker gives you access to all products available on the buy to let market. Your broker will review the whole market, find you the best options and give you expert advice.  At MFB, we've developed relationships with some of the biggest BTL lenders. This means we can access exclusive and limited-edition ranges you can't get anywhere else.

2. Dealing with experienced professionals 

To reduce the stress and time it takes to complete a mortgage application, working with our expert team at MFB is your best option. We'll make sure you have all the necessary supporting documentation for your application, and package it up. More support and less stress for you, and a higher chance of your lender accepting your application first-time! 

3. Mortgage market volatility 

The mortgage market is constantly changing. Lenders often change criteria and withdraw mortgage rates at short notice, making it difficult to keep up. Our brokers stay on top of the latest changes so they can always provide you with the most up-to-date advice. 

Lenders usually let us know about these changes ahead of time, giving our team time to reassess your application. We'll always try our hardest to secure you the best deal on the ideal loan amount for your property investment plans. 

4. Invaluable advice and support

It's our priority to secure you the best mortgage rate for your needs and provide a seamless mortgage application process. You can ask questions and discuss any concerns with your dedicated MFB broker. They'll highlight the pros and risks of your options to help you make the right financial decisions. We want to support your property investment plans and help you grow your portfolio, every step of the way.  

 At MFB, your broker remains your broker. So when you need us, there's someone here who knows you and your investment goals. 

Capital and interest repayments mean that each month, you repay part of the primary loan (the capital) and the interest charged by the lender. 

Interest-only repayments are when you only repay the interest charges every month. This means the capital loan does not decrease over time.  

Most landlords opt for interest-only buy to let mortgages, as it makes monthly repayments smaller, which can be better for cash flow. our lender needs to know how you will repay the capital loan at the end of the mortgage term when you apply. Typically, landlords sell the property or use proceeds from the sale of another to repay the capital at the end of the mortgage term. 

Lenders do offer capital and interest repayments for buy to let mortgages. Our experienced buy to let brokers can talk you through the options to help you decide the best repayment structure for you.  

We have access to all available mortgage lenders and deals on the intermediary market. Our reputation and experience mean that some lenders give us exclusive or semi-exclusive access to products. This means that we have access to mortgages you can't apply for without us. To be sure you're getting the best deal available, speak to our mortgage makers. 

Technically, there is no limit. However, lenders do have limitations on:  

• The amount of borrowing across your portfolio (either with them or with other lenders) 
• The number of mortgaged properties you have in the background (either with them or with other lenders) 
• The total loan to value (LTV) across your portfolio  

Essentially, the more mortgages you have, the greater the total debt you owe and, therefore, the higher your risk as a borrower. Our expert broker team know which lenders have which limits and what they are, so we can help you find the right lender. 

There are three main factors to consider when comparing buy to let mortgage rates, and the headline interest rate isn’t one of them! 

Criteria 

Lender criteria can vary significantly from provider to provider. While you may be a perfect applicant for one, another may not accept your circumstances at all. As such, working with one of our experienced brokers who has a thorough understanding of the buy to let market space can save you time and money, as they will only recommend lenders who they’re confident will accept your application and meet our standards of service. 

Costs 

The true cost of the mortgage is more than just the initial rate you source. You should always consider the arrangement and valuation fees, as well as the legal costs, alongside the interest rate pricing. We can help you compare the total cost of borrowing during the initial rate period of different mortgage products to ensure you secure the most competitive option. 

Hidden quirks 

Some products will have quirky additional terms, such as exit charges extending beyond the fixed rate period, which may catch you out once it’s too late. Ensure you carefully read over all the mortgage documents and speak to your broker to be confident in your mortgage application. 

Yes, there’s nothing stopping you from setting up a Limited Company today and purchasing a property through it tomorrow. As most lenders require a personal guarantee, they underwrite the applicants (the company’s directors and potentially its shareholders) behind the Limited Company as opposed to the company itself. Consequently, the mortgage is underwritten in the same way to an individual application. Read our blog on borrowing through newly set up Limited Companies here for more information. 

We have access to all available mortgage lenders and deals on the intermediary market. Our reputation and experience mean that some lenders give us exclusive or semi-exclusive access to products. This means that we have access to mortgages you can't apply for without us. To be sure you're getting the best deal available, speak to our mortgage makers. 

As a minimum, you’ll need a deposit of at least 5%. It’s worth bearing in mind that in most cases the larger the deposit you can put down, the more competitive the mortgage interest rate pricing. 

The answer to this will entirely depend on your individual circumstances. Lenders will want to review your income (or combined income if you’re purchasing with a partner or friend) to ensure that the mortgage is affordable for you. If you are a key worker you might even be able to access more competitive mortgage products from some specialist lenders.

As a general rule, lenders will offer around 4.5x the total applicant income, but our expert brokers may be able to help you access more. Visit our ‘how much can I borrow’ calculator for an estimate of what size loan you could access.

It can take between two to six weeks to get a mortgage offer , but this depends on how complex your mortgage application is and the recommended lenders service levels. After you’ve secured your mortgage offer, it takes on average a further 6 weeks to complete and draw down your loan. Once again, this will vary based on the number of properties in the chain and any complications during the conveyancing and legal process of the application.

There are a number of fees that you will need to pay when applying for your residential mortgage, and it’s important you factor these into your costs. 

The fees themselves will vary from lender to lender, but as a guide, you will need to pay: 

• Lender arrangement fee – this is what lenders will charge you to set up the mortgage. This can be a fixed amount or a percentage of the loan amount and will typically be due on completion. Most lenders will allow you to add this to the loan, although remember you will then be charged interest on this. 
•  Valuation fees – this fee covers the cost of a lender’s survey of your home. On many mortgage products, lenders will not charge a valuation fee as an incentive for borrowers, but generally cost around £250.  It's important to remember that this is a valuation for mortgage purposes and not a substitution for a more in-depth homebuyers or structural valuation report
•  Legal fees – these fees cover the costs of the conveyancing work on your mortgage, and will vary depending on your solicitor. If you don’t have a solicitor already, one of our expert residential brokers will be able to help you find one and make sure you understand what you’re paying for, as some may quote without the required legal searches included
• Stamp Duty Land Tax (SDLT) – if you’re purchasing a property, you may be liable to pay SDLT on purchases (or transfers of equity) over £250,000 or £425,000 for first-time buyers. Our SDLT calculator will help you work out how much you’ll need to pay. 

Each lender has their own SVR, which will track the Bank of England Base Rate or a similar financial rate such as LIBOR / SONIA. When you come to the end of your initial rate term, you will automatically revert onto your lender’s SVR if you haven’t had your broker arrange your remortgage for you in advance. 

Lenders SVR’s are typically much more expensive than other fixed and variable rates on the market. Lenders have complete control over their SVR pricing, meaning that shifts in money market activity don’t necessarily mean changes to your mortgage repayments.

Your financial circumstances, the complexity of your application, and your mortgage requirements will all impact whether it’s better for you to secure a mortgage with a Highstreet bank or a specialist lender. Or, it may just come down to which provider offers the most competitive mortgage deal for you. Our specialist brokers have whole-of-market access and will therefore review all your options to ensure you secure the best rate for your individual needs. 

Generally speaking, specialist lenders offer a more flexible approach to their lending and may be more willing to take a view on more complex applications. Specialist lenders will also have more bespoke criteria to support borrowers. Many specialist lenders are intermediary-only, meaning they don’t deal with borrowers directly. As a whole-of-market broker, our experts will recommend you the best specialist mortgage product deals to suit your needs.

Most lenders will allow you to make overpayments on your mortgage up to a maximum of 10% (there are a few which allow 20%) of your outstanding balance per annum. If you can afford to, it can be highly beneficial to overpay your mortgage, as you can reduce the overall term of your loan and the total amount of interest you pay. Our expert brokers can review your existing mortgage offer to confirm whether overpayments are permitted with your current mortgage deal.

Potentially. The most important thing to do when you’re considering letting out your home on a residential mortgage is to speak to one of our expert brokers who can check under what circumstance your lender may accept the request to let out your home. Some mortgage agreements won’t allow you to do this without the lender’s specific ‘consent to let’, and you could face significant consequences if you breach your mortgage conditions.

The Government are looking at new ways of helping people get onto the property ladder and often offer different schemes to help people buy their homes. 

Currently, they offer a shared ownership scheme which is UK wide, which allows you to buy a share of a home if you cannot afford the deposit or mortgage to buy it in full. You then pay both the mortgage on your share and rent to a landlord to cover the remainder. For more information on the shared ownership scheme, visit the Government website. 

Although the Help to Buy scheme is no longer available, you can still set up a Lifetime ISA to buy your first home or save for later life. You must be 18 or over, but under 40 to open a Lifetime ISA. To learn more about Lifetime ISAs, read the Government website here.  

Technically, yes, you can have more than one residential mortgage. However, lenders will be looking for substantial evidence that you use both properties as homes, rather than as property investments such as buy to lets or holiday homes. Lenders will also have strict criteria when you apply for an additional residential mortgage, as well as look to ensure you meet the required affordability assessments. Speak to our experts (as well as a tax advisor) if you’re looking to purchase a second home with a residential mortgage. 

Most mortgage offers are valid for three to six months, depending on the lender.

When purchasing or remortgaging a property for yourself or your family, it’s no small investment. The process deserves to be treated diligently and with the amount of time and consideration it needs,  

Applying for a mortgage can be complex and daunting, particularly with so many lenders and finance options out there to consider. Our mortgage brokers can help speed up this process for you and remove the stress and hassle of the application. They will also give you invaluable advice and support throughout the whole process, giving you the confidence you need, to get the results you want. 

Our residential mortgage brokers are award-winning experts in their field. They have the experience, expertise, and qualifications to support you with your home purchase, remortgage or first-time buyer needs. Their level of knowledge and understanding of the mortgage sector means you can be confident that we’ve recommended the right mortgage product for you. Our team of experts are helpful and friendly and want to source you the best mortgage deal possible. To discuss your home purchase or remortgage plans, get in touch with our residential brokers here.

Life insurance, or ‘Mortgage protection’, is not a legal requirement of your mortgage agreement. However, it is highly advisable to take out a life insurance policy to protect the people you live with from significant financial strain should you pass away. 

Similarly, Mortgage payment protection to ensure you can maintain your repayments in the event of being unable to work is also advisable. We can help you find a policy that suits your needs; just ask your dedicated MFB broker.

It’s important to be aware of the common factors that may slow down your purchase process. 

Conveyancing issues are the most frequent cause of mortgage purchase delays. These may come down to paperwork issues, complications with the property, environmental search results, or even a disagreement between a buyer and seller. To reduce the risk of this impacting your purchase, have all your documents completed and ensure your solicitor is not waiting on you for any forms. 

Survey results may also cause delays to your purchase process, particularly if structural issues are found in the property. It’s important to consider the costs of these issues and whether you’re happy to fix them yourself. You may decide to ask the seller for a discounted sale price depending on the scale of the issues. These negotiations, though necessary, can delay the process by days or potentially a couple of weeks. If you do require any additional specialist property reports such as subsidence or timber and damp, we can help you find the best companies to undertake these reports.

Finally, delays in the chain may slow down your process. Chains can be complex and long, and coordinating everyone to complete on the same day can be extremely difficult. Your dedicated relationship manager will stay in touch with your estate agent and solicitor and chase along the chain to progress things as fast as possible. 

Simply put, a remortgage is when you refinance your current mortgage to a new mortgage, typically with a new lender.

Usually, you complete a remortgage when your existing fixed-rate mortgage deal has ended. This is because, at the end of a fixed term, you’ll start paying your lender’s standard variable rate (SVR), which is nearly always more expensive than the interest rate you were paying or can secure with a new deal.

Other reasons you may want to remortgage are if your financial circumstances change or if you want to borrow more to pay for home improvements. 

You can remortgage with your existing lender (a product transfer) or with a new lender, depending on which offers you the best deal. Our experienced team of residential mortgage brokers can compare all the rates available to you and secure you the most suitable one.

Generally speaking, it takes between two to six weeks to get a mortgage offer, but this will depend on your lender and the complexity of your application. Once you’ve received your mortgage offer, the next stage of the process usually takes a further 4 to 6 weeks on average.

An ERC refers to the fee you’d need to pay your lender if you repay your mortgage agreement early during the initial period, or you exceed the agreed overpayment limits during this period.

For example, if you took a 3-year fixed mortgage, your lender may charge you a 3% fee of the amount outstanding if you repay the loan in the first year of the 3-year fixed-rate period, 2% until the end of year 2 and 1% until the end of year 3 from drawdown.

Conveyancing is the term often used to refer to the legal work completed by a conveyancer or solicitor when purchasing or selling property. It’s an essential part of the mortgage process. If you don’t already have a solicitor, we can help you find one. Ask your MFB broker for assistance. 

How much your mortgage will cost will depend on a number of factors, such as: 

• How much you borrow
• The total term of the mortgage 
• The interest rate charged
• Whether you add any fees to the loan
• The repayment method (Interest-Only or Repayment)

Your broker will compare the costs of different mortgage interest rates to make sure you’re choosing the most competitive deal. It’s important to remember that the best deal for you doesn’t necessarily mean the cheapest. You can calculate how much your monthly repayments will be with your new rate using our Mortgage Repayment Calculator. 

You can explore the current residential mortgage rates that may be available to you using our ‘Find my Mortgage’ calculator above. For a better idea of the rate you could access, speak to one of our expert brokers.

Mortgages for commercial property typically range between £50,000 and £25 million; however, how much you can borrow on a commercial mortgage depends on many factors, including loan to value (LTV), property type, trading business type, credit score and more. These factors will be unique to your circumstances. The best way to determine how much you could borrow is to speak to one of our expert commercial mortgage brokers about your plans.

Generally, commercial mortgage lenders require a minimum 25% deposit for a commercial mortgage. However, this will vary by lender, business sector, and whether it’s an investment or owner-occupier mortgage. As with most mortgages, the larger the deposit you can invest, the better the commercial mortgage interest rates you can access. Speak to our expert mortgage brokers for a definitive answer based on your current circumstances.

A commercial mortgage is a loan granted to an individual, Limited Company or Trading Limited Company to purchase or remortgage a commercial property or a business. 

The main difference between a mortgage for commercial property and a homebuyer mortgage is that a commercial mortgage can only be secured on property you cannot live in, or that is run as a business where the percentage of living space is less than 40% (like a guesthouse or hotel). However, there are some further differences to be aware of:

• The maximum loan to value (LTV) may be lower than a homebuyer mortgage
• Variable mortgage rates are more commonly used for commercial mortgages. However, fixed-rate mortgages are available from most commercial lenders.
• Commercial mortgage interest rates tend to be higher than the rates you’d secure on your home. However, unlike homebuyer mortgages, some commercial mortgage rates can be negotiated on a case-by-case basis. An MFB commercial mortgage broker may be able to secure you better terms with a lender. 

Typically, commercial mortgage interest rates are higher than residential or homebuyer mortgages. This is due to the lender’s perceived risk of the loan not being repaid and the resaleability of the property.

Commercial mortgages for owner-occupiers offer better interest rates than unsecured commercial loans. Often, the repayments for a commercial loan are cheaper than rent payments, allowing businesses to plan and have tenure security. Traditionally, these loans last from 10 to 25 years, usually repayment mortgage, with variable interest rates linked to the Bank of England Base rate and cover around 60% to 75% of the freehold property value. Some lenders can lend against a percentage of the ‘going concern value’, but please be aware additional security may be required by the lenders.

If you invest in commercial property to rent out, the interest rates may be higher, but some are available on an interest-only basis (making repayments lower). The property’s actual rental income or potential rental income will need to service the mortgage, but the lending will be no higher than 65 to 75% of the investment value.

Depending on the case's complexity, we’d expect commercial owner-occupier mortgages to take between six and 12 weeks to complete from the point of application

The quickest way to determine if you can get a commercial mortgage is to speak to one of our expert commercial mortgage brokers. However, this summary will help you decide whether you’re eligible.

Commercial mortgage eligibility is based on your background experience and by assessing your ability to meet the monthly loan repayments. As with any mortgage, commercial mortgage lenders want to see financial evidence that you can repay the lending.

For commercial investment mortgages, for properties you let out to other businesses, lenders will conduct background checks to satisfy the risk, including: 

• Assessing your net worth
• The source of your deposit
• The rental income for the property, either existing or predicted
• The quality of the tenant and lease term remaining
• Checking your personal and/or Limited Company bank statements for proof of good accounting
• FAFT elegibility if an expat or foreign national

For commercial owner-occupier mortgages, where you intend to run your business from the premises, lenders will want to know a lot about you and your business. Therefore, they’ll check:

• Your net worth
• The value of your existing or target business
• The source of your deposit
• Two to three years’ historical financial accounts for either existing or target business purchases
• Business bank statements for proof of good accounting

Commercial property typically refers to any property which contains a trading business but can also include large residential rental properties like blocks of flats, and land that generates an income. With such a broad spectrum of property possibilities, commercial mortgage lenders have varying approaches and appetites for different properties and business types. At MFB, our specialist commercial team have dealt with almost every commercial property and business type. However, here are some of the sectors we deal with most often:

• Retail (e.g., shops and high street services)
• Large residential (e.g., MUFBs)
• Hotels
• Hospitality (e.g., Pubs and Restaurants)
• Childcare businesses
• Care-homes

Lenders prefer commercial investment borrowers to have some letting experience before considering your application. Letting out residential property is a good place to start, as this comes with less risk than commercial property. However, commercial lenders are more likely to consider applications on a case-by-case basis, so if you want to get into commercial property investment, call us.

Some lenders will consider advancing to start-ups; however, the criteria is often stricter, offering a higher loan to value and a more robust evaluation of the projected sales figures. In addition to the above list (excluding business bank statements and VAT returns), lenders will need:

• A complete business plan which contains information to support the assumptions made within the document
• Three years projected profit and loss figures
• At least 12 months cash flow forecast

Commercial mortgage lenders can offer up to 80% of the property value, particularly if this is a preferred sector of the bank’s policy. If the business’s profitability is exceptional and you have the right level of experience, the banks could lend up to 100% of the purchase by taking additional tangible security. This could be a second charge over your private dwelling or a second legal charge over an investment property.

The documentation you’ll need for a semi-commercial mortgage application depends on the lender and the case. As a general rule, you’re likely to need the following:

• 3-6 months personal or Limited Company bank statements
• 3-6 months of business bank statements (for owner-occupier applications)
• 2-year record of accounts (for owner-occupier applications)
• Details of ASTs or leases (for investment applications)
• Record of your background property portfolio

Our team of commercial brokers will know which lenders require what documentation, so will help collate and prepare everything to help with a smooth application process.

Mostly, no. Unless you’re making significant structural changes to your home, operating a guesthouse-type enterprise or a business that takes up a large proportion of your property, your standard residential mortgage will be suitable. If you’re unsure, speak to our team.