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Get a buy to let mortgage in Scotland

Written By:
Myles Robinson - Expert Finance Advisor

Posted: Aug 12, 2022

Buy to let mortgages in Scotland – Lenders, deals and best rates

We get many enquiries about Buy to Let mortgages for property investment in Scotland from buyers unfamiliar with the rental property industry.

Many are uncertain about their options and how to make a profit on rental properties despite the tax relief imposed upon Buy to Let landlords in 2015.

However, buying to let mortgages in Scotland doesn’t have to be complicated.

Our advisors have access to many lenders in Scotland. They can help you navigate the process from beginning to end, even if your credit isn’t perfect.

Enquire here for mortgage advice free of charge to discuss buy-to-let properties.

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What are the different rules for buying in Scotland on a BTL

Yes. This is called ‘Right to rent, but it does not apply to landlords in Scotland.

Do I need to register as a landlord to run a buy-to-let in Scotland?

Yes. You must register with the council where your rental property is located before you can lease it out.

Register your buy-to-let properties before you rent your property. This will ensure that you comply with all legal requirements.

Registering as joint owners (anyone named on title deeds) is required, but they will not be charged.

The Scottish Government website has the most current information on registering as a landlord.

Tax on Land and Building Transactions

Stamp Duty Land Tax is a tax that applies in England to properties valued at more than £125,000; however, it does not apply in Scotland.

Instead, when you purchase a property, you will pay Land and Buildings Transaction Tax.

Some variances between the Uk and Scotland for Stamp duty are:

Revenue Scotland receives payments, not HMRC

Scotland uses different price bands to determine the Land and Buildings Transaction Tax rates than the rest of the UK.

If you buy a second property in Scotland or a Buy to Let property, 3% must be added to the property’s purchase price.

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Do you need to apply for a BTL Mortgage in Scotland?

Many landlords apply for a buy-to-let mortgage for a limited company. This option is worth considering if you create the company as a special-purpose vehicle SPV. You can buy BTLs from limited trading business, but this will limit the number of lenders you can approach.

An SPV or Limited Company BTL allows you to separate personal property (e.g. your home) from your Buy-to-Let portfolio in addition to tax relief.

If you purchase through an SPV or Ltd company, some lenders may also require personal guarantees from directors.

Alternatively, we can connect you with an expert SPV and limited company who can inform and advise you about any Buy to Let Scotland changes and how they could affect your mortgage.

Which are the best areas to buy to let in Scotland?

Although commuter areas around Edinburgh and the capital remain the most sought-after Buy to Let Locations, these can be expensive. The same goes for areas around major cities such as Glasgow.

You may not see a greater return on your buy-to-let investment if you are an investor with enough money to buy a Buy to Let property.

Although you can charge higher rent, it might not be as profitable as the initial purchase. You might consider spreading the deposit across two properties to get a better return.

Opportunities to invest in Scotland through Buy-to-Let

A Buy to Let property could be more profitable in an area or town where it is less expensive to buy. If the property’s value increases, you may also be able to rent it out.

This is called capital appreciation and is why many Buy to Let landlords choose properties in ‘up-and-coming areas’. These can often prove to be excellent investment opportunities.

This may be more affordable if you are a first-time buyer or if this is your first buy-to-let. You will need a lower mortgage to purchase a less expensive property. This can reduce your financial risk and make it easier for you to get approved by some lenders.

How to find the most affordable Buy to Let locations

It can be beneficial to determine the average rental yield when deciding where to own property for a Buy to Let property in Scotland.

This is where you will need to determine how much rent you would charge per annum. You can also look at similar properties on the letting agency websites to compare rental fees.

Once you have the figure, divide it with the market price of your property and multiply it by 100 to get your rental yield percentage. The property will be valued more if the percentage is higher.

The following calculation would be used if you wanted to charge £750 per month for rent on a property that is worth £140,000:

Rent 9000/property value (£140,000 = 0.064

(x 100) = 6.4%

What is the best rental yield on a Scottish property?

Rent-to-let property should have a minimum of 7% rental yields to ensure you can make a profit after you pay your mortgage payments, insurance, and running costs (if these are included in your rental fees).

How much deposit do you need to get a Buy to Let mortgage for Scotland?

Lenders view Buy-to-Let mortgages as a greater risk because the mortgage payments depend heavily on the ability to find tenants. Also, tenants will likely pay their rent on time and in full.

They often require a higher down deposit. The minimum deposit required for a Buy to Let mortgage in the UK is typically 25% of the property’s total value. This can vary depending on your situation, as lenders may require a 20% to 40% deposit.

Talk to a mortgage adviser to determine how much you will need to deposit with a particular lender. They can assess your situation and help you to choose the right deposit size.

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How can lenders determine your affordability for a Buy to Let purchase?

Most lenders offer affordability checks that may include questions about your earnings, ages and experiences as a landlord. Most lenders require that your rental income be between 25-30% and your mortgage payment.

A landlord with monthly mortgage payments of £500 would need to charge his tenants at least £625 per month.

Before you apply for a Buy to Let mortgage, it is a good idea to consult a Buy to Let expert. They will have the most current information about lenders likely to approve you. They will also know about the different criteria they use. The mortgage experts we work with can help you find the right lender for you based on your circumstances and needs.

They can advise you about what to expect regarding mortgage payments, fees, and rent charges.

For more information, please contact a member of our team

Can bad credit impact your ability to get a mortgage in Scotland for a BTL?

Many homeowners have had their bad credit scores turned down by other lenders to get a BTL loan in Scotland.

Each lender has its criteria for deciding whether it can lend to you. Just because one lender rejected you or requested a higher deposit doesn’t mean another lender will.

While some lenders won’t accept borrowers with bad credit, others will. In the right circumstances, a bad-credit mortgage broker can review your credit report and help you find the right mortgage lender.


Do I need to seek advice before applying to buy to let property in Scotland?

Our brokers arrange to Buy to Let mortgages daily and have relationships with specialist lenders such as The Royal Bank of Scotland.

Finding the right lender will save you money and relieve moving stress. They will also handle all paperwork, landlord insurance, and negotiations.

Only work with brokers that are:

  • Whole market
  • OMA-accredited advisors
  • Completed an LIBF Training Course
  • Are you an expert on the Scottish market and buy-to-let?

Talk to a BTL expert today about Scotland mortgages

Call today to ask questions about the Buy to Let Scheme in Scotland. Enquire online.

Relax, and let us find the buy-to-let broker who is the best fit for you. There is no fee, and you are not under any obligation.

If you are looking for a residential mortgage or discussing income tax, monthly repayments or anything else about property purchase, we are here to help.

Enquire here to start your journey.

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