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Contractor buy to let mortgages are the best investment over 18 years - Contractor Financials News

As regular Planet Contractor readers will know, Contractor Financials has always championed buy to let mortgages. In fact we have secured many Contractor’s their first buy to let property and have then seen them go on to develop a whole portfolio.

We have seen first-hand how a buy to let portfolio can boost our client’s income, both now and into retirement but a recent study has confirmed that buy to let has actually been the best investment of the last 18 years. The return that landlords have been able to achieve on their properties has surpassed other investments such as equities, bonds, cash and commercial property.


Boom time for Buy to Let

According to the Bank of England the market is positively booming as the number of buy to let mortgages has risen by over 50% in the past 12 months.

This recent research conducted by Paragon Mortgages gave a comparison of the value of £1000 in today’s money had it been invested in 1996 and how it would have fared in various investments:

  • Cash would be worth only £1,949
  • UK Government bonds, £2,924
  • UK equities, £3,082
  • Commercial property, £3,654
  • A buy to let based on a 75% LTV would of grown to £13,048, this is a huge compound annual return of 16.3% and clearly out performs the other investments

The research assumed that buy to let investors started with only one property but once this first property had provided enough equity for a further 25% deposit, this could have been put towards a next property, therefore beginning a portfolio of investments.

Paragon also reports that buy to let landlords are hoping to benefit from further growth of 5.6% on their investments in the next 12 months and the current level of tenancy demand is consistently growing month by month.

Here at Contractor Financials we work closely with specialist Lenders who can offer very competitive buy to let rates so perhaps you too can join the growing number of optimistic landlords across the UK.

Become a Landlord in 10 easy steps…

  1. Secure an agreement in principle – a dedicated Adviser will assess your needs and arrange an agreement in principle that you can use when negotiating and offering on a property.
  2. Find your perfect investment property – this can be both exciting and daunting, knowing how much to borrow can help narrow your search.
  3. Make an offer – once you have found your property you can now start to negotiate a purchase price. The maximum size of your buy to let mortgage is calculated using the rental yield of the property, which needs to be 125% of the annual mortgage repayments.
  4. Contact your Adviser to start the mortgage application – once you have agreed a purchase price for the property, you should call or email your Adviser and we can kick start the mortgage application. At this stage, your Adviser will introduce you to your dedicated Mortgage Processor who will ensure that your application runs smoothly.
  5. Your mortgage application “goes live” – in order to process your application you will need to provide various forms of identification. At this stage you will need to instruct a Solicitor and your Adviser will be able to make recommendations from an approved list, all on a no successful sale no legal fees basis.
  6. Searches and building surveys are carried out on the property – various checks such as area searches and land surveys are carried out to protect you and to secure your new investment.
  7. Your mortgage offer will be produced – Once all the Lenders searches and surveys have been completed, we will push your Lender to issue a formal mortgage offer.
  8. Your solicitor will request your deposit money and exchange contracts.
  9. You will agree a completion date – a completion date is agreed with your Solicitor and then negotiated with the Seller.
  10. Congratulations, you are now the proud owner of a buy to let property!

Securing a Contractor buy to let mortgage

Contrary to popular belief, you will still need to prove your income when you apply for a Contractor buy to let mortgage as the Lender will need to ensure that you are able to cover the repayments if you have a “void” without a tenant.

At Contractor Financials, we can base your mortgage affordability on your contract rate alone whereas, if you were to approach a Lender direct they may demand to see two years of accounts.

Typically, you will need to save a 25% deposit to invest in your buy to let property but our specialist mortgage team have managed to secure a buy to let mortgage with as little as 15% deposit for those landlords that don’t want to wait and hope to benefit from anticipated house price inflation.

MMR won’t impact on your buy to let mortgage application

The much talked about Mortgage Market Review (MMR) has yet to have an impact on the buy to let market as the FCA has chosen not to include commercial funding in its reforms of the market in general. This means that the more stringent checks applied by Lenders to standard mortgage applications will not apply to potential landlords.

However, at Contractor Financials we have been MMR compliant for a considerable time now and have prudently applied the same sense checks to our buy to let clients to ensure that your application should sail through. This should also offer peace of mind to our Contractor clients that your Contractor buy to let mortgage should be future proofed as there is talk that MMR will be extended to include buy to let lending in the near future. Our approach should hopefully make remortgaging a breeze as your mortgage will already be fully compliant with the current MMR regulations so any changes to policy should have little to no impact.

Contractor Financials current Contractor buy to let mortgage rates

We work closely with Lenders who can offer very competitive buy to let mortgages for Contractors. Clydesdale Bank require a deposit of 25% for their two year fixed rate of 3.99%, crucially with no arrangement fee.

If you are remortgaging through Clydesdale they will pay for the mortgage valuation and all the legal fees associated with the switch. As Clydesdale are one of our Contractor friendly Lenders, you can benefit from our contract based underwriting on your buy to let which will help to ensure that you meet the criteria to secure the lending that you require.

In an exciting twist, Santander have changed their buy to let lending criteria in the past month to allow Contractors with two years of company accounts to take advantage of a fantastic two year fixed rate mortgage at 3.19%, with an arrangement fee of £1495. Previously, Santander only allowed permanent employees to secure lending so this is a positive sign that more firms are considering the importance of tailored lending solutions for the Contractor community.

Fees free buy to let mortgage Advice

Contractors can also rest assured that we still won’t charge for our expert advice or for the processing of your mortgage application. This can immediately save over £500 compared to other brokers who charge a fee, which can be put towards decorating your new property and getting it ready for your new tenants.

To find out more about how you too could potentially benefit from the best investment over the last 18 years, contact one of our award winning Advisers at Contractor Financials on 0845 062 8888 or fill in a contact form and secure the most competitive buy to let mortgage rates available for Contractors.

About the author

Tony has been an IFA for over 18 years and set up ContractorFinancials in 2002 after recognising a need for specialist financial advice for Contractors. The company has grown to be the leader in its field with over 10,000 clients yet we still pride ourselves on retaining a highly personalised service. We offer jargon free and timely mortgage, pension, insurance and investment solutions tailored to the unique needs of Contractors.


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The value of investments may fall as well as rise and past performance is not a guide to future returns.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Contractor Financials Ltd is regulated and authorised by the Financial Conduct Authority no. 207478

Not all products are regulated by the FCA e.g. buy to let mortgages.