Regulated Buy To Let Mortgage

What Is A Regulated Buy To Let Mortgage?

If you are renting to a family member you will need a Regulated buy to let mortgage. What does this mean? It means that the Financial Conduct Authority regulates the mortgage, offering extra protection. Basically most buy to let mortgages are considered commercial, or a business. Therefore the financial conduct authority do not normally regulate them.

Are Buy To Let Mortgages Regulated?

Buy to Let mortgages are not usually regulated. This means that you could therefore have an advisor that has no qualifications and experience. They also may not be regulated by the financial conduct authority like we are. However they become regulated if you are renting out to family members as it is no longer a business asset.

Do You Need Proof Of Income For Buy To Let Mortgages?

Generally for an Unregulated or Regulated Buy to Let Mortgage Lenders assess the application based on the rental income you will receive on the property. This is set primarily by what you think you will get in rental income. Additionally what the lenders Surveyor says the property is capable of getting. However for a regulated buy to let mortgage they will probably assess your income as well. This is to ensure you can afford to pay the mortgage if your tenants don’t. This is because you are unlikely to evict your own family. However you probably would if a regular tenant didn’t pay their rent.

Are Business Buy To Let Mortgages Regulated By The Fca?

Generally speaking Business Buy to Let Mortgages are not Regulated.  As they are usually for commercial purposes, i.e. to make money. The Financial Conduct Authority rarely regulates them.

Can You Rent To Family Member Under A Buy To Let Mortgage?

Yes you most certainly can. This is when a Buy to Let mortgage becomes regulated. If you want a member of your family to live in the property whether they pay the rent at market levels or not the mortgage will become regulated. This not only means you need a Regulated Mortgage Advisor. It also offers you certain protections from the Financial Conduct Authority and the FInancial Ombudsman.

Understanding Regulated Buy-to-Let Mortgages

Regulated buy-to-let mortgages are specialised mortgage products designed for individuals who intend to rent out residential properties to family members. These mortgages fall under the purview of the Financial Conduct Authority (FCA) and offer additional consumer protection compared to regular buy-to-let mortgages.

To be classified as a regulated buy-to-let mortgage, certain criteria must be met. Firstly, the property being let must be occupied by a close family member, such as a spouse, child, grandparent, or sibling. Secondly, the borrower must also have a certain level of ownership in the property (typically a minimum of 40%). These criteria ensure that the mortgage is intended for personal use rather than commercial investment purposes.

Can You Live In A House With A Buy To Let Mortgage?

Lenders won’t want you to live in a property that you have taken out as a Rental property. It was taken out for a purpose and you’ll need to speak to your lender if you want to change it to a residential property. They may want you to change the type of mortgage you have.

Can I Buy My Parents House And Rent It Back To Them?

You may be able to, however not on a regulated Buy to Let mortgage usually. Instead you may be able to purchase the property and let them carry on living in it as a second home. This would be a residential mortgage. You can however buy a property that your Parents don’t live in and rent it back to them. It would then be a regulated mortgage.

Regulated Buy To Let Mortgage Calculator

As there are a lot of factors involved in working out how much you can borrow we don’t have a regulated buy to let mortgage calculator. However if you can spare us ten minutes over the phone we can tell you, and we’ll do it for free.

Non Regulated Buy To Let Mortgage

This is a standard buy to let mortgage. The Financial Conduct Authority does not regulate most Buy to Let Mortgages. It usually only needs a regulated buy to let mortgage if the property is not to be used for business purposes.

Regulated Buy To Let Mortgage Lenders

Not many lenders have products for a regulated buy to let mortgage. Even those that do have products for Regulated Buy to Let Mortgages will have very strict criteria usually. Lenders also change their products constantly so any list we published would be out of date really quickly. However if you want to know which lenders are currently offering a Regulated Buy to let mortgage get in touch and we can tell you for free.

How Much Deposit Will I Need For This Type Of Mortgage?

Generally you will probably need at least 25% of the property value for this type of Mortgage. This is pretty standard with most Buy To Let Mortgages. however with a regulated buy to let mortgage you are even more limited with your options. Therefore you will probably need a larger deposit.

Best Buy To Let Regulated Mortgages

There are many things to consider when looking for a regulated buy to let mortgage. Such as do you want the mortgage in your personal name or through a limited company. If you want the mortgage through a limited company you may find your options are really limited . If you are trying to decide what type of mortgage you need it’s worth speaking to both a Specialist Mortgage Broker and a specialist Tax advisor.

Compare Regulated Buy To Let Mortgages

There usually aren’t many mortgages to compare, and which one to go for will depend a lot on your situation. Who you are renting the property to, and your income. Quite often with a Regulated Buy to let mortgage they may want to know you can afford the mortgage on a residential basis instead of a buy to let basis. This is because if your tenants didn’t pay the rent, you are less likely to kick them out and find a new tenant if they are family.

Got A Question We Haven’t Answered? Maybe We Do On Our Main Buy To Let Page. If Not, Get In Touch.