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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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Advias Ltd provides independent mortgage advice and  is Authorised and Regulated by the Financial Conduct Authority and is entered on the Financial Services Register (https://register.fca.org.uk/s/) under reference 982478 The FCA do not regulate some forms of Business Buy to Let Mortgages and Commercial Mortgages to Limited Companies. The information contained within this website is subject on the UK regulatory regime and is therefore targeted at consumers based in the UK. Your property may be repossessed if you do not keep up repayments on your mortgage. A fee will be payable for arranging your mortgage. Your consultant will confirm the amount before you choose to proceed, but this is typically 0.25% of the mortgage balance, e.g. £2,500 for a mortgage of £1,000,000. Advias Ltd Registered Address: Unit 1 The Cam Centre, Wilbury Way, Hitchin, Hertfordshire, United Kingdom, SG4 0TW Registered in England and Wales No: 13206156. We are a credit broker and not a lender. Once we have assessed your needs, we will recommend a lender(s) that provides suitable products to meet your personal circumstances and requirements, though you are not obliged to take our advice or recommendation. Whichever lender we introduce you to, we will typically receive commission from them after completion of the transaction. The amount of commission we receive will normally be a fixed percentage of the amount you borrow from the lender. Commission paid to us may vary in amount depending on the lender and product. The lenders we work with pay commission at different rates. However, the amount of commission that we receive from a lender does not have an effect on the amount that you pay to that lender under your credit agreement.
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