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Proving Income Buy to Let

Written By:
Myles Robinson - Expert Finance Advisor

Posted: Aug 16, 2022

Proving income for buy to let mortgages for most UK lenders

It’s no surprise that many people in the UK have taken their excess cash and invested it in buy-to-let (BTL) over the last 10 or so years.

There are many products on the buy-to-let mortgage market. However, your income will play a significant role in deciding if they suit you.

Although it may seem strange that a mortgage lender would want to know what you earn, your minimum income and how it is made, they will most likely need this information. They usually base their decision on rental income, which is all they have.

Lenders don’t like risk. Lenders want to see that you can pay the mortgage payments on time. Confused? We aren’t surprised.

Enquire below to speak with a mortgage broker who will offer free advice on a buy to let mortgage.

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How much income am I required to get a mortgage for a buy-to-let property?

Some mortgage lenders may have minimum income requirements (around £25,000), but most lenders will be more interested to see how much rental income your rental property can generate.

Most mortgage providers will look for evidence that rental coverage exceeds 125-145% when they do their affordability assessment for purchase to let. However, this percentage can vary depending on the factors discussed in this article.

What documents are required for a mortgage to buy-to-let?

While buy-to-let mortgages require less paperwork than regular mortgages, it is still essential to have the following documents on hand in case your lender requires them.

  • Proof of income ( You may need the last three months’ pay slips to get a mortgage.
  • Statement of mortgage for an existing property
  • Rent income proof
  • You will need proof of deposit from your donor if they request it in writing.
  • Any commission or bonus must be proven
  • Photo ID (passport/driving licence)
  • Address proof
  • Current or most recent P60
  • If you are self-employed, your SA302 tax returns forms

It can sometimes take several weeks to receive certain tax forms. Therefore, gathering all necessary documents before you submit your application is a good idea.

Is it possible to get a mortgage for a buy-to-let property without having a job?

Although you may be eligible for a mortgage to buy-to-let with no income, there might not be many lenders available. Many lenders won’t consider applications from first-time landlords unless they can show that they own the home, have paid off the existing mortgage within 12 months and meet the income thresholds.

If you don’t have a job, your property ownership is insufficient to qualify for most lenders. However, some lenders will consider buying to let if you have the right circumstances.

Lenders may grant you a buy-to-let mortgage with no income if you can prove that you have saved, such as an inheritance lump sum or redundancy package.

Benefit income can be used to help you get a mortgage

Some lenders will consider benefits income when determining the affordability of a buy-to-let mortgage. However, this can vary widely.

A buy-to-let housing benefit mortgage is more likely to be approved if the income is sustainable. This rule applies in general.

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Pensions can be used to help fund the purchase of lets

You can withdraw cash from your pension tax-free if you are over 55. You should not withdraw cash from your pension if you are under 55. The tax rate is often high, so it’s best to wait until you become seriously ill before you retire.

However, changes to pension legislation now allow borrowers to use their entire pension plan funds to finance investments via a self-invested personal pension (SIPP).

A SIPP cannot be rented or bought property on a commercial basis. You can’t purchase a property to use as a pension. This means that you will need professional accounting and financial advice. A SIPP can be borrowed up to 50% of its actual value.

Bridging finance is used to purchase a buy-to-let property

Developers often use short-term bridging financing to purchase uninhabitable properties that need renovation before they are sold or let.

Because of the high cost of bridging finance, landlords rarely use them to finance long-term properties. Rent rarely covers monthly payments, and most bridging lenders offer deals for only 6-12 months.

Most people who use a bridge must show proof of their exit plan. This could be the sale or refinance of a buy-to-let mortgage to rent it out.

Bridge-to-let mortgages can be used to get buy-to-let finance approved at the time of application. This avoids issues when exiting from the bridge.

Bridging loans are available for those who have enough deposit and sufficient income. However, it is essential to consider the exit strategy. Paying off the mortgage with rental income alone can be risky and could require you to burn through your savings.

What happens if I am a landlord and my income comes from buy-to-let?

It all depends on how many properties you own.

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Professional landlords who have less than four properties can prove income proof.

You may be a professional landlord, and your only source of income is from buy-to-let.

You should still be eligible to get buy-to-let mortgages as long as you have the accounts of your properties and your self-assessment return tax return.

Portfolio landlords who own four properties or more can prove their income.

Lenders take a different approach to landlords with a portfolio of buy-to-let mortgages regarding the number of properties a landlord can mortgage.

No matter who the mortgage lender is, most lenders will limit the number of properties that can get mortgaged. The lender assessment does not include properties that are not owned.

If you are self-employed, prove your income.

Lenders are allowing self-employed workers and contract workers to increase in the UK. They have begun to relax their lending criteria to allow for buy-to-let mortgages for the self-employed.

However, you will need to submit the most recent company accounts for the past one or three years, evidence that earnings were similar, bank statements, proof of address, and photo ID.

Also, you will need to show proof of your deposit of at least 25% of the property’s value. However, sometimes, your lender may allow as little as 15%.

You could also consider approaching a European lender or specialist to obtain a self-certification mortgage.

They are intended to help borrowers looking for a buy-to-let mortgage without proof of income. However, they are generally banned in the UK due to the increased lending risk.

Remember that a self-cert mortgage buy-to-let will not offer the same protections as other buy-to-let mortgages. Before you do a self-assessment of buy-to-let, it is a good idea to consult an independent mortgage advisor.

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Can I obtain a buy-to-let mortgage as a contractor?

Although you might think it is impossible to get a mortgage if you are a contract worker, this is not always the case. There are buy-to-let mortgages available for contractors.

Your contract will determine how many mortgages you can get. While some professions rely on contracts, others work primarily on ongoing contracts. If the work is expected to be continuous, you should be eligible for a mortgage.

You may have trouble if you have a short-term or seasonal contract.

For contractors, the primary considerations when buying-to-let mortgages are:

  • Are you signing your first contract? Renewed contracts are accepted more readily.
  • What length of time is left? Most lenders require at least six months, but some lenders will consider contracts that are longer than this.
  • What length of time have you been doing this job (most lenders need 6-12 months, but some are happy starting from day one)?

What are the limits on age?

Lenders may limit the number of mortgages they offer and the length of the term they will lend to applicants based on their age.

18 is the minimum age to apply for a BTL Mortgage. However, some lenders won’t deal with anyone under 21 (or 25).

There are many options for maximum age requirements. Some lenders may set a threshold of 75, others 85, and some lenders have no upper limit.

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Do I need to inform the lender what rent I will charge?

Absolutely. Most lenders will calculate your buy-to-let mortgage based only on rental income.

Due to the turmoil in the market over the past ten years and new regulations implemented by Prudential Regulation Authority, lenders have become more stringent about ensuring that the mortgage can be repaid.

Lenders will not just want to ensure that the rent you can charge on the property covers the mortgage repayment. They will also require you to show proof that you can generate more rental income than necessary. Lenders need to see proof that you can afford maintenance and rental void periods.

Lenders are also aware that changes in the tax structure and relief available to landlords have impacted the cost of buying a property to let.

Many lenders expect you to have a rental coverage calculation above 145%.

This means that you will need to be able to charge rent at 45% more than your mortgage repayment. For example, a monthly rent payment of £1,000 will require you to generate rental income equivalent to £1,450. Some lenders will require you to repay 125% of the loan amount.

Can I use my income for rental payments?

Some lenders now allow borrowers to use personal income to cover shortfalls in rental income (known as BTL Top-Slicing). Even if you use the buy-to-let income to pay rents, many lenders will insist that the rents earned on stress-tested payments not exceed 110%.

Can I buy a mortgage to rent the house and get a mortgage for a buy-to-let?

No. This would violate your mortgage terms, and the lender would be able to cancel the loan.

You may be an accidental landlord by moving in with a partner, which would require a consumer buy-to-let mortgage.

Most lenders will be happy to notify you, though some may raise the interest rate slightly.

Talk to an expert mortgage broker for buy to let

You can contact for Mortgage Advice to discuss any of the topics or make an enquiry.

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.

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