Search for a buy-to-let mortgage

Undaunted by my first apparent buy-to-let mortgage cul-de-sac I set off again in search of my ultimate buy-to-let mortgage.

Having failed initially by going down the DIY route I'd thought I'd enrol some assistance from a mortgage broker. I've used mortgage brokers before and I knew that they are very good at sifting through the various mortgage providers to find ones that meet an individual's circumstances. In my case being self employed and with very little income I needed a mortgage that could be secured entirely against the expected rent from the buy-to-let property. Therefore, adopting the philosophy that gaining advice from 5 brokers rather than one I filled out one of the enquiry forms on Property Hawk's mortgage section. I'll be honest part of the interest was to see if it worked. It did very well.

Where do I go to search for my own buy-to-let mortgage?

Good resposnse
Within minutes I had phone and e-mail responses from the brokers I selected. Having used Mortgages For Business before I decided to respond to them first. I spoke to one of their brokers and explained that I needed a lender who was prepared to lend against the property and not based on my personal income. I also didn't want a fixed rate and preferred a tracker or variable.

The broker Andy I think his name gave me a couple of options. I liked the 6.29% tracker partly because it was only for 2 years (after which time surely the mortgage market will be back to normal) and also because the fee at 1.25% (min £875) wasn't silly and could be added to the loan. Details of indicative terms and a letter of engagement were e-mailed within a couple of hours of our chat.

One thing that struck me on receipt of the documentation was MFB were going to charge me for their broking work. Not unreasonable, but £297 is still 297 pounds. I got to thinking was there a way round this?.......

Landlord go for Gold and enter the Olympic Spirit

Landlords are been offered the opportunity to get in on the olympic gold rush.

Things are going so well out there in Beijing the gold rush seems to of become an epidemic and it seems that this winning theme is being encouraged in the property letting sector.

So keep an eye out for double gold award winning landlords, I think Dame Margo has a rather nice ring to it, dont you think.

A NEW initiative which gives private sector landlords in the Borough the chance to go for Gold has been unveiled.

The Draft Scheme of Landlord Accreditation, which covers Castle Morpeth, Wansbeck and Blyth Valley, aims to help people access good quality homes in the private rented sector and recognise landlords committed to providing them.

Dame Margo MBE

Book your FREE tickets for London Landlords’ Day - September 4th, 2008.

Where can I get quotes from 5 leading brokers using 1 form?

Should I form a company for my property empire?

Should I form a company to build my empire?

This is a question that I am frequently asked and unfortunately there is no simple answer because so much depends on your plans for the future and your current circumstances. However, I will try and give some guidelines. This will give you a starting point to discuss with your accountant or financial advisor.

Lets start with the basics.

A company pays Corporation Tax (CT) at 21% on profits up to £300,000. Above that there is a sliding scale but the maximum tax on its profits is 28%. This sounds good when compared to income tax at 20% on income up to £36,000 per annum and 40% above that. But the problem is the money is in the COMPANY and there will be further tax to pay when it is taken out for the shareholders use.

The term "Corporate Veil" is a term used by the courts to describe the relationship between a company and its shareholders. The point is that a company is a separate entity from its shareholders and its employees. It pays its own tax on profits and gains. It can be sued for its debts and is the legal owner of the money it makes. If the shareholders want to take money out of the company, getting it through the aforementioned 'corporate veil, will usually create a tax charge.
There are broadly speaking, five ways to extract cash from your company.

1. Wages, salaries and bonuses.

2. Dividends

3. Benefits in kind

4. Loans

5. Liquidation or share sales.

As this is a subject that can run over many pages, I will deal with a separate one each week, starting with Wages,salaries and bonuses.

As a rule-of-thumb, this is the most expensive way, because both you and the company will have National Insurance contributions to pay. For 2008/09 yours will be 11% up to a salary of £40,040 and 1% thereafter. The company will pay the employers contribution of 12.8% with no upper limit.. If the company is your only source of employment, no National Insurance contribution is due on wages of less than £105 per week.

In these circumstances, it makes sense to pay yourself and any shareholders, including family members who genuinely work for the company, this much per week. Because the company can claim the cost of your salary as an expense against its profits chargeable to corporation tax, there will be a saving of £1,146.6 (£105 x 52 weeks =£5,460 reduction in company profit (taxed at 21%) saves £1.146.6) as a result of paying a salary just equal to the NIC threshold. The income tax payable is neither here nor there, because if you were trading as an individual, you would have to pay that.

Next week, I will cover dividends.

If you can't wait for the next four exciting instalments, you can request the whole subject, just by emailing helpdesk@taxrefundmoney.co.uk and putting "Company Business" in the subject matter and I will arrange for a copy of the whole article to wing its way to you.

the undercover landlord's search for a buy-to-let mortgage

This is a my first proper post as the under cover landlord.

The idea is that I give you the reader a warts and all guide to doing certain things that us a landlords need to do. I pull no punches, spin no half truths. I just tell it as it is!

This is my tale of trying to find a buy-to-let mortgage in the post “credit crunch” world.

Beat the credit crunch - 1 simple form - 4 leading brokers

My personal circumstances
My circumstances may be different to some of you. I’m self employed and therefore don’t have a regular salary. Straight away this limits the numbers and availability of buy-to-let mortgage products. A significant proportion of buy-to-let lenders require landlords to have a regular income above a certain level, £20k seems pretty standard.

Maximum flexibility
Because the loan was for what hopefully will be a short to medium term depending on the success of my intended investments, ideally I wanted a flexible mortgage. Having used a publication that I subscribe to Moneyfacts I was able to find buy-to-let mortgage lenders that allowed over payments, under payments, capital lump sum payments and early redemption of the mortgage.

At the time these included: Astra from N&P, Bank of Scotland Mortgages, BM Solutions, Bradford & Bingley, Chelsea BS, Cheshire BS, Leeds BS, Northern Rock, UCB Home Loans Corp, Yorkshire Bank.

These buy-to-let mortgage providers offered a variety of : repayment holidays, underpayments, over payments, lump sump withdrawals and drawdown facilitys which all suited my requirement of flexibility.

Drawn to obscure lender
I was immediately drawn to one obscure lender; The Staffordshire Railway BS which offered all the above options apart from lump sump withdrawal. On further investigation I discovered by using my copy of Moneyfacts Business that they also offered a pretty competitive rate of 6.85% with a free valuation. All was looking pretty good!

Having identified this promising buy-to-let product I used Property Hawk’s lender details to find the buy-to-let lenders website and to check out their details. I then made a initial phone enquiry. Unfortunately, it turns out that the lender was only lending on properties within its’ home county of Staffordshire. As my property was in Nottinghamshire that ruled me out straight away. Time for PLAN B!

Landlord Takes Extreme Action to get Unpaid Rents the American Way

Landlords in Britain conjure up an image of old Rigsby in Rising Damp, snivelling around trying to get any un-paid rents out of their tenants. Very much a kitchen sink scale drama.

Now what happens if you send the same situation over to the old USA. Well it gets the US blockbuster treatment, bigger, better, stronger with a vengeance.

Think Rambo not Rigsby.

Im talking a big fat Arnie sized cigar and a shout of 'I'll be Back!'

Yes in this news story from the states a landlord who had not received his rent decided to bring in a blockbuster style solution to the proceedings.

He decided to leave out the 'section 21 notice' and straight for the keys of his Hummer, ramming the vehicle into the tenants house.

The police said the 30-year-old landlord crashed the Sports Utility Vehicle into a home on Lute Court in Harmony Woods about 3 a.m. Thursday.

A 50-year-old woman and her 53-year-old husband sleeping inside and were jolted awake by a loud crash and the house shaking.

Officers learned the man was the landlord and went to his home and saw the damaged Hummer with a pine branch stuck in the front bumper.

The landlord was charged with endangering the welfare of those inside, reckless driving and harassment, among other charges.

The bit that confuses me is that as the landlord he resulted in crashing into his own property which probably wouldn't be seen as the most astute of actions.

Heh, those Americans. Even the landlords think they're film stars.

Energy Performance Certificates get a Negative Response from PropertyHawk Users

Energy Performance Certificates on rental properties will be required by landlords on all their rental properties by October as I hope all landlords are aware.

I'm not one for all this added paper work and costs that this government like to put upon us.

I wondered what other landlords thought about this added expense ( approx. £85 a pop ), times that by 10, 20 or 50 properties and that adds up to a lot of money.

So I set up a poll on the blogs to see if any landlords welcomed this new government initiative.

Well the results are in, the telephone lines are closed any further votes will not be entered.

And the result are in and are a 100% - NO!

That means that there were no landlords that's right 0% of landlords who voted thought Energy Performance Certificates were a good idea.

Well tough luck - all us landlords will have to get one.

Anyway moving on let's hope the Tories when they get in will at least get rid of these pointless HIP's folders, that we can all see were only kept going because the government couldn't face another embarrassing u-turn as regards housing policy. The only partly useful thing left in them is the Energy Performance Certificate.

Maybe by scrapping HIPS it might help to put a glimmer of life back into the housing market.