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Moving is an exciting time, and we're here to make sure you find the right mortgage.
We believe that everyone should be able to own their own home, should you want to. And it's our job to help make it happen.
When investing in a buy-to-let property, you need to know that your mortgage meets your criteria.
Our promise to your is to make sure you never pay more than you need to. We understand how important it is to get the right deal.
At Your Expert Group, we'll help you decide if you think you need protection for your home and mortgage.
Using our mortgage calculators, we can help you understand key things like how much you can borrow.
By using our mortgage calculators, we can help you understand key things like how much you can borrow.
Use our Stamp Duty data to work out if you’ll have to pay stamp duty and if so, how much.
Use our mortgage borrowing calculator and discover how much money you could borrow.
Land and Buildings Transaction Tax (LBTT) is Scotland’s version of UK’s Stamp Duty Tax.
Scotland
If you’ve bought an investment property and are considering, or have already decided to let it to friends or family, it’s important to be aware that you’re still running a business. This means you need to have a contract and abide by the legal rules and regulations of letting a property, regardless of how closely related you are to the tenants.
If you’re seeking a buy-to-let mortgage for your investment property, the lender is likely to require you to charge rent at 125% or higher than the monthly mortgage costs, so it may not be possible for you to give your friends or family a discount or let them live in the property for free.
Under the Housing Health and Safety Rating System, all properties that are let privately must abide by 29 rules and regulations. This means they need to be warm, free from damp and leaks and the electrics and gas must be safe – the latter needing an annual gas safety check and a certificate issued by a Gas Safe professional. You also need an Energy Performance Certificate to highlight the property’s energy efficiency rating and see if further repairs or improvements to the property are necessary.
Knowing or being related to the tenants does not absolve you of your responsibilities as a landlord, so you cannot ask them to put up with problems in return for a reduced rent.
If you let the property to a family member or friend and they pay you any rent at all, this must be declared. If the rent is higher than the costs, you may need to pay taxon the excess income.
If the property is either a second home or another investment property and eventually sells for more than you paid for it, it is likely Capital Gains Tax will be owed at the current rate on the increase in value – minus any allowable costs and your personal tax-free allowance.
Even though it may be awkward, you should still sign a formal rental agreement, as families and friends can fall out with each other. Putting everything in writing ensures that there can be no debate or confusion over what was agreed, should things go wrong. If eviction becomes necessary and you do not have any kind of written contract, the process can become lengthy, expensive and stressful.
This is especially the case if the tenant decides to have other people living in the property as it all needs to be on the tenancy agreement.
Finally, think about what would happen to the property and to your relative or friend living there if anything happened to you? Would they still be able to rent the property? Would it need to be sold? It’s always advisable to update your Will when you have an investment property, but when friends and family are involved it is even more important to think about worst-case scenarios.
It is possible to let to family and friends, but it is important to make sure this isn’t done on a casual basis or you may accidentally fall foul of the law and your lending terms and conditions.
If you need a mortgage to buy the property, you should speak to one of our specialists, as not all lenders like to provide buy-to-let mortgages for investment properties that are rented to family and friends. Our buy-to-let specialists can help make sure you have access to the right lenders and finance.
Your home may be repossessed if you do not keep up repayments on your mortgage.
There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances. The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.
There is no guarantee that it will be possible to arrange continuous letting of the property, nor that rental income will be sufficient to meet the cost of the mortgage.
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TMR Financial Solutions is a trading name of Your Expert Mortgage and Protection Ltd which is an appointed representative of Mortgage Advice Bureau Limited and Mortgage Advice Bureau (Derby) Limited which are authorised and regulated by the Financial Conduct Authority.
Your Expert Mortgage and Protection. Registered Office: 89 West Regent Street, Glasgow, Scotland, G2 2BA. Registered in Scotland number: SC674157.
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