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Mortgages / Buy to Let mortgages
Whether you are starting or expanding your property portfolio, we are here to help you get the right mortgage deal with our range of Buy to Let mortgage products. Check out our steps below to getting started to put you on the right path to buy to let.
Check your eligibility to apply, how much you could borrow and our fees. Don't forget about the costs of buying, running and maintaining your Buy to Let property.
Find out how much you can borrow, what the maximum loan size on a Buy to Let property is, and what your monthly repayments could be.
Once you’re ready to view properties you need to decide what type of property you are looking for – a house or a flat, freehold, leasehold or share transfer.
Lending is at the Bank’s discretion and you must be 18 or over and resident in Jersey, Guernsey, Alderney or the Isle of Man to apply. Security will be required.
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
You could apply for a Buy to Let mortgage if:
How much could I borrow?You can hold a maximum of three mortgages or borrow up to £1.5 million in total.
The maximum loan size on a single Buy to Let property is £500,000. Applications over this amount may be accepted and will be considered on an individual basis.
The most you could borrow is linked to the amount of rental income our surveyor thinks you could earn. The annual rental income must equate to a minimum of 125% of the annual (interest only) mortgage payment based on the higher of a notional interest rate or the initial rate for the mortgage deal.
In some cases we’ll also look at your personal income, and may take into consideration the additional cost of any increased tax liability. As a responsible lender, we must consider the future sustainability of your borrowing.
Our mortgage arrangers will give you an idea of what you could borrow, current interest rates and compare monthly payments. You’ll also be able to discuss interest only repayment options.
Book an appointment
Our mortgage arrangers are here to help you every step of the way. They will provide you with all the information to help you choose the right Buy to Let mortgage.
Understand all of the costs
Take time to understand the costs involved in buying, running and maintaining your Buy to Let property.
Here are the main day-to-day running costs you’ll need to take into consideration. It’s important to remember you are responsible for making the monthly mortgage payments even when the property does not have a tenant:
Decide what type of property you are looking for - a house or a flat, freehold, leasehold or share transfer.
Normally a house is sold freehold, which means that you own it entirely, for as long as you like.
Other than in Guernsey, where flats are purchased freehold (or Jersey where they are normally purchased as a share transfer), flats are normally purchased leasehold where you have ownership of the property for a period of years – sometimes as long as 999 years but normally much shorter.
Once the lease has come to an end the property reverts back to the freeholder. Therefore it is important to have a lease of sufficient length if you wish to sell the flat later. This will also affect our lending decision.
During the period of the lease the freeholder will maintain the structure of the overall building, which includes the flat and the surrounding land. You will be charged a ‘ground rent’ or ‘service charge’ each year for your share of these costs.
Viewings When you are considering buying a property it is a good idea to visit the property at different times of the day to find out, for example, if the street is noisy at night or whether it is particularly busy at lunchtimes.
Don't visit only when the sun is shining. If you visit during a storm, you may be able to spot a leaky roof or poorly fitted windows.
Making notes on the particulars, if you are buying through an estate agent, can be very useful and help you to compare properties. It is also important to check for things like damp. Issues like this can cause delays or extra costs later in the process.
Where to lookOnce you've decided which type of property you would like to buy, you can begin the search.
Existing propertiesThere are two main sources of information available for purchases of existing properties:
New propertiesIf you are interested in buying a new property, you may be able to approach the builder directly so that you can benefit from any discounts or free fittings, for example kitchen appliances or carpets, that may be on offer. Builders normally advertise their properties through local newspapers and sometimes through local estate agents.
One advantage of buying a new property is that you avoid 'chain' problems, which often occur when the seller decides not to sell because his or her purchase has fallen through. Buying a new property also gives you a 'clean slate' to work with.
Once you’ve found your ideal property, you can make a formal offer. The amount you offer should be based on how much you can afford, the potential rental income, as well as the market value of the property.
Before you decide what to offer, it is a good idea to check how the asking price compares with neighbouring properties, how long the property has been on the market and whether the seller has found somewhere else to buy.
Many sellers fix their asking price above what they would be willing to accept because they expect potential buyers to offer less than the ‘advertised’ price. Don’t be afraid to negotiate. You can always increase your offer and carry out any price negotiations through the estate agent or builder, but if you are buying privately, you may agree the price directly with the seller or the seller’s advocate/solicitor.
Once you have agreed a price, you should tell your advocate/ solicitor. Remember that making and accepting verbal offers is not legally binding and therefore neither you nor the seller would be committed to the purchase at this stage.
Always take legal advice before signing any documents or paying any deposit.
Mortgage application forms are available from all our branches, but we would advise you to complete them with the help of your mortgage arranger. Once your offer has been accepted, you will need to finalise the arrangements for the mortgage with your mortgage arranger.
To ensure your application progresses as smoothly as possible it is important to bring all required paperwork to your appointment with your arranger.
When meeting your mortgage arranger to complete the application, or if you are handing in the completed application, please ensure the following original documents are also provided, if applicable:
The original document can be given to your mortgage arranger who will be happy to photocopy and certify it for you.
When you apply for your mortgage it is important to check the value of the property that you intend to buy.
ValuationsAs a lender we also need to make sure that it is worth more than the amount you wish to borrow, and can produce the required rental income. Therefore, before we can complete your mortgage we will need to have a ‘lender’s valuation’ carried out by a valuer acting for the bank, selected from an approved panel of valuers. You can find a more detailed explanation of this and other types of valuation below.
Please bear in mind that once the valuation is commissioned you must pay for it whether or not you proceed with the purchase and whether or not the property is suitable as security.
Lender’s valuationThis is the cheapest option and the minimum we require for a Lloyds Bank International mortgage.
This is simply a valuation that helps us to decide how much we can lend. It will not necessarily highlight any structural problems and you should not rely on the valuation to decide whether to buy the property or to determine how much you should pay for it. We strongly recommend that you have a more comprehensive survey done for your own peace of mind.
Homebuyer’s reportThis is a ‘mid-priced’ option and is appropriate for most people because it provides enough information to highlight potential problems and could influence your decision to purchase the property or help you negotiate a lower price. It is less detailed than the full structural survey, but includes an inspection on the general state of repair and condition of the property and, provided it has been carried out by a Lloyds Bank International approved surveyor, will also be acceptable as a valuation for mortgage purposes.
Full structural surveyThis is the most expensive of the three options but is well worth considering. If you are buying an old property or one that you think will need extensive repairs or alterations, this type of survey will bring to your attention any structural work that needs to be done and may prove invaluable in helping you to avoid costly mistakes or to negotiate a lower price if any problems are revealed. A full structural survey can also cover the requirements for a mortgage valuation providing you use a Lloyds Bank International approved surveyor and let us know about the survey in advance.
Your mortgage arranger should be able to give you an indication of the costs for each type of survey.
When purchasing a flat in a block building, the valuer may have issues accessing the whole property. This should be considered and checked when deciding on which type of valuation to get.
The mortgage offerOnce your application has been accepted, we will normally make a mortgage offer based on the purchase price. However, if the valuation is lower than the purchase price, we will only base our mortgage offer on the valuation figure.
You will receive your offer in the form of a letter from us which sets out the details of the mortgage such as the interest rate, payment method, mortgage term and repayment amounts.
Before the purchase of your new property goes ahead, an advocate/solicitor will need to complete all the legal work for you – a process known as conveyancing.
Before you make a decision, do ask for an estimate as to what the legal fees will be.
Your advocate should carry out a number of searches and enquiries on your behalf, such as:
Once your offer has been accepted the following should happen:
These steps can take anything from a few days to several weeks to complete depending on whether you are buying a new or existing property and how quickly the seller wants to move.
At this stage your advocate will:
The legal process for your purchase is similar to Guernsey but is governed by the Alderney Land Registry.
The conditions of sale are very close in form to those used in Guernsey but there is no obligation for you to attend court as completion is by registration of a land transfer document which can be submitted by post. There is a requirement by the Alderney Land Registry for verification of your identity which must be satisfied before the registration can take place.
Once your offer has been accepted the following should happen.
The principle of freehold is that the land on which the property sits is owned by you, and by extension everything below and above that plot of land also.
Until 1991, only houses could be owned in this way, and flats had to be purchased differently. Confirmation of ownership is a contract of purchase, passed before the Royal Court. There is no registered land in Jersey although there is register of contracts passed before the Royal Court.
Before 1991 ownership of a flat was problematic. A limited company was formed to own the whole building. The articles of the company are phrased to link the exclusive occupation of each flat to a block of shares. Each block of shares then gives the owner the exclusive rights of occupation, use and enjoyment to a specific flat in the block.
The company’s memorandum and articles of association states the duties and obligations of both the company and the shareholder, and a copy of them must be obtained by the purchaser before entering into a share vending agreement to buy a block of shares.
The Population Office rarely has control over share purchases, so effectively anyone can buy on a share transfer basis. Occupation of the flat is controlled and only usually those who hold the correct status may live in it.
The 1991 ‘flying freehold’ law introduced the possibility of buying a flat in a way similar to a normal freehold purchase. The owner of a flying freehold property will automatically become a member of an association of co-owners. The association’s rules will state the rights and obligations of each member, including responsibilities in regard to common areas such as stairways and gardens.
There is no stamp duty in the Isle of Man but recordal fees are payable to the Isle of Man Government.
Advocates are permitted to act for both parties in property transactions provided there is no conflict of interest and no objection is raised by either party.
It’s important to arrange appropriate insurance for your Buy to Let property.
Standard property insurance policies do not normally pay out when a property is let.
Landlord insurance is a specialist policy that covers landlords against a range of eventualities. As well as insuring the building and any contents that belong to the landlord, these policies often provide legal cover.
How much can I borrow?
You’ll need to book an appointment with one of our mortgage arrangers. If approved, you’ll be given an indication of how much you could borrow. There’s no charge for this, and no obligation to apply for your mortgage with us.
Book an appointment or see the right-hand panel for a contact number.
What you’ll need for your appointment/to apply
It would be helpful for you to bring as much as possible with you on the below list:
What should I consider when choosing which property to buy?
Tenants - think carefully about the type of tenant you want to attract e.g. young professionals, families or sharers. Considering this may help you to decide on the type of property you purchase and its location. The property should be let based on the equivalent of an assured shorthold tenancy agreement. This should be for a minimum 6-month and maximum 12-month period.
Location - do your research and visit different areas. Location is an important consideration and will often determine the type of tenant you will let to. Don’t necessarily buy locally to your own property. Think about prosperous areas which might attract a higher demand for rental property. Once you've chosen an area consider the locality, think about transport links, parking, shops, schools and other local facilities - pick the brains of letting agents for information about areas where properties may be easier to rent.
Condition of the property - if you're buying a property which needs improvements, restrictions could be placed on the amount you can borrow and it could also delay how quickly you can let the property out. Can you afford the mortgage payments during the renovation period?
Rental income - do your property homework, talk to local letting agents, check the local press to find out comparable rental values. The mortgage valuation will include an estimate of the rental income of the property on an unfurnished basis. But remember, there are no guarantees of what rental income you will get or if the property will rise in value over time.
Your obligations as a landlord
Each island has different rules here, so please take independent guidance from a lawyer or agency.
A tenancy agreement is a contract between the landlord and tenant. It is most likely to be an Assured Shorthold Tenancy agreement (AST), and provides limited security of tenure to the tenant. Although the content of tenancy agreements varies, they should typically contain the following clauses, but because requirements differ on each island, you should seek local advice:
The tenancy agreement should be signed by the tenant and the letting agent, or the landlord if no agent is involved. It can subsequently be changed if both parties agree. We recommend you seek advice from a letting agent or independent legal advice on the terms of the proposed tenancy agreement.
Initial deposits cover you against missing items or any damage caused by the tenant.
Deposit Protection Schemes
Check requirements with your island government’s website for details.
This may help with the legal costs of dealing with tenant disputes and include other valuable cover including:
Tenants are responsible for insuring their own personal possessions.
Landlord repair and maintenance obligations
As landlord repair and maintenance obligations differ for each island, please seek local advice to find out the right information for you.
Ending a tenancy
As the termination of a tenancy agreement differs for each island, please seek local advice to find out the right information for you.
Getting your property ready to rent
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