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Finance For First Time Landlords

Kevin Wright, Independent Financial Adviser comments

The Mortgage Works (TMW) have tightened their criteria for accepting first time landlords i.e. someone who already owns the property they live in but does not own any properties that they rent out; as opposed to a first time buyer. Like all the Buy-To-Let lenders, TMW continues to be vigilant in detecting investors that are trying to break the lenders rules.

With first time landlords TMW suspect that some applicants may be trying to buy a property to actually live in rather than to rent it out. In other words, they want to get a better property to live in than their current main residence but their provable earnings mean that they can't get a big enough mortgage. These borrowers have a devious plan of applying for a buy to let mortgage when their real plan is to move into the new, better property and then rent out their current inferior main residence; breaking the terms and conditions of both mortgage lenders in the process. Thus TMW have introduced new rules that any first time landlord applicant will need to pass:

  • Evidence of deposit and proof of personal income is required on all applications
  • There is no minimum personal income requirement; however the loan must not exceed 4.25 x the applicant's personal income
  • Copy of bank statement (e.g. bank/building society savings account or ISA) will be required. If the current statement shows a sudden influx of funds, older statements may be requested.

Let to Buy applications, where the borrower is refinancing their current main residence to fund the purchase of a new main residence property, then renting out what will become their previous main residence, has also seen a tightening of criteria:

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