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If you’re looking to purchase a property at auction – perhaps to refurbish, or to acquire the land to build upon – then you may need finance to complete the transaction.
The results provided by this calculator are estimates only. Actual loan terms, amounts, and rates may vary based on your specific circumstances and lender requirements. We recommend consulting with a financial advisor or lender for a detailed, personalized quote.
If you’re looking to purchase a property at auction – perhaps to refurbish, or to acquire the land to build upon – then you may need finance to complete the transaction.
Our buy to let mortgage calculator makes it easy to see how expensive your BTL mortgage could be. It’s quick and easy to use and gives you an instant idea of your monthly and yearly payments. Of course, the best way to find out which buy to let mortgages you can get on the market is to contact Hank Zarihs Associates for the latest and most competitive deals from trusted lenders, but the buy to let mortgage calculator is a handy tool for your planning.
Buy to let mortgages vary greatly according to lender, LTV, sum to be borrowed, desired term and fees. Our mortgage calculator lets you see how much that all-important monthly payment could be, and the impact of changing interest rates – allowing you to carry out sensitivity analysis for different deals. The calculator will help you to establish affordability and to work out how factors such as your deposit, term and rental income would affect your repayments and the all-important yield, or return, on your investment. After all, most buy to let mortgage lenders expect borrowers to be able to make a yield of around 125% of rental income against monthly mortgage costs, so it’s important that you can maintain a healthy ratio to minimise risk.
The online buy to let mortgage calculator is extremely easy to use. Simply add the value of the property that you are seeking to buy or remortgage and the loan to value sum that you will be seeking to achieve (either via a deposit or equity). Then, add your expected or existing rental per month and your rent per annum. In the following box, you can also add figures for the stressed % and the multiple % (for example, if the lender expects a rent to mortgage payment ratio of 125%, you would add this here). This then tells you what your required monthly and annual rental income would need to be to meet lender terms.
In the third box, add the interest rate and the lender fee to see how much the mortgage itself would cost you each month and over the year. By adjusting these figures, you can see the impact that changing different variables has on key factors such as your rental cover, and interest payments.
The buy to let mortgage market has exploded in recent years, as individuals, companies, trusts and partnerships seek to invest in buy to let properties to build a rental income and grow and asset base, in what can be a profitable investment if well managed. Although the tax position of buy to lets has become arguably less favourable in recent years (primarily as the interest portion of BTL mortgages has lost its tax-deductible status), landlords and investors across the UK are still keen to snap up BTL properties and to build up healthy and rewarding investments with a strong return, especially in the buoyant rental market.
With a buy to let property, you offset your monthly mortgage repayments with rental income from your tenant/s. Most lenders will expect to see a rental cover of at least 125%, which means that you will be earning a residual income; either to reinvest or to set aside for the costs of maintaining your BTL property over time.
The beauty of this type of investment is that it offers an income and underlying asset growth at the same time, with the property market enjoying steady and strong growth in the UK. British property is seen as being an attractive and solid investment for the longer-term and many investors and landlords buy this type of property as part of their pension or equivalent long-term portfolio asset.
Interest payments on savings accounts are low, and the stock market is volatile. The British property market is a favoured asset for many investors who are building a high-performing portfolio, with strong underlying demand for quality rental properties and the ability to enjoy healthy returns in many areas where rental yields are high, along with the growth of the property asset itself over time.
Low interest rates also mean that buy to let mortgages in the UK are currently very attractively priced and widely available from trusted lenders. This offers applicants the chance to buy investment properties to rent or to remortgage existing BTL properties at favourable rates- especially when those mortgages are secured through a broker such as Hank Zarihs Associates, which has access to the most competitive deals on the market.
Most lenders will require a certain rental yield or cover in order to agree a mortgage. This is because the landlord must have a margin of income above the mortgage repayment itself, in order to cover the costs of maintaining a BTL investment (such as repairs etc.) The rental yield lessens the risk for the lender and borrower alike. By using our rental yield calculator you can input your anticipated or existing yield against the sum you wish to borrow, the term and the interest rate and see whether a) it is sufficient to meet your lender’s requirements and b) what the impact is on your monthly mortgage repayments.
Buy to let mortgages are offered according to the value of the property, the applicant’s credit rating, the underlying base rate, and the applicant’s deposit. The costs will include fees such as the broker arrangement fee, exit fees, legal fees and valuation work and full details of these are provided in the tailored illustration.
For the latest buy to let mortgage examples, use our calculator to input indicative interest rates at your estimated LTV – bearing in mind that a lower LTV (say, 60%) will be cheaper to service with a loan than a higher one of around 85%. Most lenders will want to see an LTV of at least 75%.
A great buy to let investment will offer both income, growth and a stable investment asset which doesn’t constantly fluctuate in value like the stock market, and which earns better returns than savings accounts. Rental demand is also projected to stay consistently strong in the UK.
This will depend on a variety of factors such as your creditworthiness, deposit or equity, borrowing needs, existing borrowing and the underlying market conditions. Hank Zarihs Associates can help you to secure the mortgage that you need to meet your property investment ambitions, with a panel of ready lenders with a great track record in the field.
Returns on a buy to let property vary significantly according to property type and region. For example, HMOs – or habitats of multiple occupancy – can typically provide higher yields but the risks are higher. It is important to factor in risks and growth of the property as well as rental income. Factors such as tenant turnover and non-payment costs (including evictions and costs of managing a property) must also be factored in; something that landlords learn to do over time and with experience.
The true answer here depends on how much of your own cash you are using to finance your BTL. The higher geared your rental property is (e.g. the higher the amount of finance you have secured on it – whilst still maintaining full rental cover) the better your return, as your tenant is repaying the mortgage to your lender, while you enjoy the underlying asset growth – and potentially net income gains too. You can work out your ROI by taking your net annual profit (after costs) and dividing it by the cash that you’ve invested, before multiplying it by 100 to get a percentage figure. If you can achieve an ROI that exceeds other asset classes, you are doing well. If you can repay the mortgage with a repayment BTL mortgage, then you will also be increasing your asset base – useful if you are building a pension pot for example.
The best buy to let mortgage deal for your property will depend on your own personal situation and objectives. Our team of experienced lenders can help you to access the best possible buy to let mortgage deals from tried and tested BTL lenders and to access rates which aren’t typically available on the open market. We also provide expert and transparent information so that you can make a confident choice with complete peace of mind in the product that you choose – and we work on a long-term relationship basis too. In fact, many of our clients value our service so much that they use us time and time again as they remortgage their BTL properties and build their portfolios.
Our team are on hand to help you secure the best BTL mortgage for your needs. It takes us just five minutes to gather the information that we need to work with our panel and to provide you with a list of tailored offers within the hour. Contact us today on +44 (0) 20 3889 4403 to discuss your needs. Our team operates from 9 am to 9 pm, Monday to Friday. You can also complete our online web callback form to request a call from one of our brokers at a time that best suits you.
You may have heard about bridging loans in the context of property investment or moving house, but what exactly are they? Basically, bridging finance is a type of short-term loan that allows a buyer to purchase a property before their existing home or investment property is sold. As the name suggests, it ‘bridges’ the funding gap in the lag between purchase and sale – offering rapid access to the necessary purchase funds for a brief period of time.
Borrowers can access from £5,000 to £250 million, depending on applicant status, the value of the property and other lender criteria. Higher lending amounts are typically reserved for borrowers who can put up several properties as security. Quotes are provided on a Loan to Value (LTV) of 65%-80% in most situations.
The bridging finance market has grown rapidly, with a number of small and focused lenders now on the market, catering for specialist property finance needs. The market has changed because large high-street lenders have become less willing (and sometimes less able) to lend ever since the financial crisis of 2008.
As to whether a bridging loan for property development, auction purchase or private home buying is a good idea, it depends on a variety of factors. Bridging loan requirements vary by lender, but each will have certain common features that need to be considered.
The most notable feature of this type of finance is that the interest rate is likely to be high. At the same time, there are typically high administration fees applied to the loan. Because of this, it is essential to proceed very carefully and with a full view of the facts. Borrowers have been burned by this type of loan in the past, in instances where transactions have fallen through, or where lenders have turned out to be unscrupulous and untrustworthy.
Benefits of instant bridging loans
1. Rapid access to money
2. Ability to borrow large sums – often up to £250 million depending on applicant status
3. Options for flexible borrowing.
Possible downsides of bridging loans:
1. Failure to understand the unique features of these loans can result in financial risk
2. Bridging finance is secured against your property; meaning it can be sold if you can’t meet the repayment terms
3. A costly option with fees and higher interest
Bridging finance interest rates will vary by lender. However, interest costs of 1.5% a month are not unusual, which can equate to an annual percentage rate of 18%.
Bridging loans may have fixed or variable interest rate features. Fixed interest rates are ideal for customers who want stability, as they offer the same amount of interest for the duration of the term. The rate is pre-agreed, but there may be a premium for this security.
The other choice is to have a variable rate bridging loan which can change with the base rate. However, you can save money if the base rate decreases. Borrowers who are less concerned about security sometimes prefer the variable rate option if they believe that the financial markets will travel in their favour. Knowledge and market insight is required here, along with a thorough understanding of personal risk tolerance. If interest rates appear to be rising, most customers will choose the fixed interest rate to lock it in and avoid further increases in the event of a base rate rise.
Bridging loan periods tend to be for several months and there are usually different options for paying the interest portion.
Monthly repayments
The customer repays the interest every month as a separate payment, rather than adding it to the outstanding balance
Rolled-up bridging finance deals
The compound interest is calculated monthly but added to the outstanding loan balance and paid together when repayment is due.
Retained interest
The monthly interest payment due is covered up to a predefined date so that the full sum is only repaid when monies are due.
As well as interest payments, there will be an arrangement fee for the set-up of the bridging loan, which is usually around 1-2%. A repayment fee for exit paperwork may also apply, along with valuation fees for the cost of the surveyor.
Remember, this type of finance is designed to be short-term. As soon as it extends beyond the agreed interim or bridging period, penalties can rapidly stack up. Typically, bridging finance is available for 1 – 18 months.
Yes, there are two broad types: closed bridging finance and open bridging finance.
With closed bridging finance you will tell the lender how you will repay the loan – with what funds and when. These loans usually complete within a few months and the clear exit plan is required as a lending condition.
Open bridge finance won’t usually need this type of exit plan, and it is typically the loan of choice when funds are needed urgently to complete a property transaction. No detailed plan is needed to explain how the debt will be settled, and the finance tends to be offered for up to a year. Of course, it’s important to note that interest will keep being applied throughout this period.
There are also first charge bridging loans and second charge bridging loans.
If you have a loan against a property which is already mortgaged, you’d take out a second charge loan. An example of this would be if you were planning to finance a property extension to improve the property. The categorisation tells the lenders who will have legal priority for repayment if the loan was unable to be paid off at the term-end.
First charge loans apply if the new loan is the first secured on the property.
Bridging loan requirements will depend on the lender. Often, lenders will require that:
Customers must also take out their property mortgage with them too, providing the bridge finance as an interim measure before the standard mortgage comes into play.
Property is put forward as security against the loan. Some lenders expect applicants to have more than one property in order to be eligible for their bridging finance products, but this will depend on the lender and the size of the loan.
Applicants show proof of income – although, interestingly, as loan interest isn’t repaid monthly, some lenders do not request this.
The applicant shows evidence of their property investment track record if they are planning to develop their purchased property.
The applicant can show a business plan if they are using the bridging loan for commercial purposes.
Development loans are another type of short-term property development loan. They are repaid in stages and calculated on the gross value of the development. Personal loans are another option, as are remortgages when timescales are more flexible and a long-term loan is desirable.
Use a bridge loan calculator
Ask for your lender to provide a tailored bridge finance example or illustration around your particular borrowing needs.
Think carefully about the type of bridging loan that you need – whether open bridge finance or closed bridge finance.
Know whether the loan is a first or second charge type.
Clarify whether the interest rate is fixed or variable.
Review products from several lenders.
Be clear on your security.
Read the small print!
Bridging loans are offered by banks, building societies, specialist lenders and brokers. They aren’t widely advertised and usually require a direct application by the customer to find out the product features and offers.
Once you have made an application, a decision will usually be made within 24 hours. The funds then will take around two weeks to be issued, including time for checks to be carried out, the valuation and the actual transfer.
Hank Zarihs are highly experienced and specialist financial intermediaries operating in the property development market. We work with a tried and tested panel of over 60 trusted lenders and can provide excellent bridging finance with attractive features. Contact us to find out more.
Hank Zarihs Associates streamlines your financing journey with tailored solutions, fast approvals, and expert guidance, connecting you to trusted lenders for project success
A Privately Owned Independent Boutique Financier Whose Main Area of Focus is the UK Real Estate Market. Specialists in Raising Debt and Equity for Professional Sophisticated Investors and Developers.
Our core focus is offering fast solutions, financial products that deliver results, and the highest of service levels. If you would like to find out more please contact us to discuss your funding requirements.
Address: 2nd floor North Park House, The Precinct, High Road, Broxbourne, EN10 7HY, United Kingdom
Mobile: +44 (0) 20 3889 4403
Email: contact@hankzarihs.com
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