Can You Use Market Rent to Secure the Maximum Buy to Let Mortgage Amount?

Maximum Buy to Let Mortgage
When it comes to property investments, understanding your financial options is crucial. One question that often arises for landlords is whether they can use the market rent to raise the maximum Buy To Let mortgage, particularly when the property is under let. If you find yourself in this situation, the short answer is yes, you can, although there are some caveats.

Why a property could be under Let

There are various reasons why a property might be let for less than its market rent. Here are some of the common scenarios:

  1. Long-standing Tenant: You may have a tenant who has been with you for an extended period, and you wish to maintain that relationship by not increasing the rent.
  2. Lack of Market Awareness: Sometimes landlords aren’t fully aware that the rent they are charging is below market value.
  3. Market Dynamics: The property market can be volatile, and market rents can increase during the tenure of a lease.

Lender's Perspective

It’s worth noting that not all lenders are keen on using market rent to calculate the loan amount. The primary concern for most lenders is risk, and they usually consider the actual rent to be a more accurate reflection of that risk.

However, there are lenders out there willing to base the mortgage amount on market rent, especially if there are strong indications that the property can command that rate.

Financial Considerations

Before you decide to proceed, it’s essential to consider whether this move is financially viable. Raising funds based on the market rent can potentially secure a larger loan, but remember that the actual rent received will be what you have to cover your mortgage costs and other outgoings.

Tips for a Fair Valuation

When you go through the valuation process, ensure that the valuer is not made aware of the current rent. This helps in achieving a fair and unbiased assessment. To bolster your case, you can also gather rent assessments from local estate agents to help the valuer arrive at an informed conclusion.

In Conclusion

Raising a mortgage based on the market rent of an under-let property is possible but comes with its own set of challenges and considerations. As always, each situation is unique, so it’s crucial to seek advice from financial and property experts to ensure you’re making the best decision for your circumstances.

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