Which mortgage: Consumer buy-to-let or buy-to-let for accidental landlords

Which mortgage: Consumer buy-to-let or buy-to-let for accidental landlords

In today’s housing market it’s not uncommon for homeowners to find themselves accidental landlords through necessity, not choice because they are struggling to sell, or have inherited a property.

Renting these properties to tenants while holding a residential mortgage on them is likely to breach mortgage terms, resulting in penalties from lenders or even the full loan amount being called in. While navigating the buy-to-let market can be daunting with no previous experience, and securing a mortgage can be an intimidating process, there are some good options available.

Support for accidental landlords

Sainsbury’s Bank has launched a new mortgage product aimed specifically at accidental landlords who find they need to switch their residential mortgage to a buy-to-let. Rather than having to undergo the steep learning curve to understand the often difficult and complex buy-to-let mortgage sector, the Sainsbury’s ‘consumer buy-to-let mortgage range’ is aimed specifically at making things simple for homeowners who find themselves accidentally becoming landlords.

To qualify, borrowers must show that the property was not bought with an intention to let and not own any other buy-to-let properties. Borrowers will still need to meet the same rental income requirements as any other buy-to let property, show that they can meet the mortgage repayments if interest rates rise above 5% and demonstrate that they can fund their current lifestyle without relying on rental income (unlike buy-to-let investors).

Unlike most buy-to-let lenders who are less amenable if you have started letting a property without the correct mortgage in place, accidental landlords can make the application to Sainsbury’s Bank before renting or after finding a tenant.

David Buxton, head of banking at Sainsbury’s Bank, said: “We are delighted to introduce our…consumer buy-to-let products as we’re keen to begin to help smaller investors and non-portfolio landlords manage their mortgage outgoings.”

Consider exploring buy-to-let products for the best deal

However, Sainsbury’s Bank is not the only option for accidental landlords who are willing to make a case for themselves and their borrowing requirements. Existing lenders with a buy-to-let range should be investigated to see what deals are available and then used as a benchmark to evaluate other mortgage products against.

Whilst the buy-to-let market can seem challenging, it is often no more difficult to navigate than residential mortgages once you have all your personal and financial information in order. The best deal is always the one whose true cost over the mortgage term is the least, regardless of its product name or lender.

Regulatory differences might be a deciding factor

Although a typical buy-to-let mortgage might offer the best financial deal, some borrowers might prefer the security of a consumer buy-to-let mortgage. Buy-to-let mortgages are business mortgages and do not offer the same levels of protection as consumer buy-to-let mortgages. These are regulated in the same way as residential mortgages, since the mortgage was needed as a result of a business decision. For those that prefer the higher level of consumer protection, a consumer buy-to-let mortgage might be the preferred option.

Self-certified Sophisticated Investor

Please read

I declare that I am a self-certified sophisticated investor for the purposes of the restriction on promotion of non-mainstream pooled investments. I understand that this means:

I am a self-certified sophisticated investor because at least one of the following applies:

I accept that the investments to which the promotions will relate may expose me to a significant risk of losing all of the money or other property invested. I am aware that it is open to me seek advice from someone who specialises in advising on non-mainstream pooled investments.

High Net Worth Investor

Please read

I make this statement so that I can receive promotional communications which are exempt from the restriction on promotion of non-mainstream pooled investments. The exemption relates to certified high net worth investors and I declare that I qualify as such because at least one of the following applies to me:

STAY AHEAD OF THE MARKET

Sign up for first access to new developments and exclusive property investment opportunities.

We send limited and targeted emails on new launches and exclusive deals which best fit your areas. We are trusted by over 30,000 active buyers as their source for new stock.

  • New property developments
  • Professional market reports
  • Property deal alerts
  • Development updates
Manchester property investment

FIRST FOR NEWS AND KNOWLEDGE.

Receive trending news straight to your inbox and stay up to date on all of the property market trends and advice.

Established since 2005 we are a leading voice of authority and commentary on the UK property market. Our news is trusted by Apple News & Google News.

  • UK housing market
  • Mortgage & money
  • Buy-to-let landlords
  • Guides & advice

Talk to us

Speak to our UK property experts today:

 

+44 (0) 333 123 0320

Open from 9am-6pm GMT

 

+852 6699 9008

Open from 9am-6pm HKT