Specialist Mortgages

The phrase specialist mortgages is a term coined by brokers and lenders for mortgages in a niche area of the market. While the mortgage lenders and mortgage products are often different, the principles behind these mortgages are exactly the same as any other mortgages and hence they are still bread and butter for most mortgage brokers. There are brokerages who solely do this kind of niche work and many provide a great service. However, just because they may be called specialist mortgages, they really don’t take a specialist broker – don’t get sold to and end up paying a hefty fee because someone’s told you it takes a specialist!

So, what are often branded as “specialist mortgages”?

HMO/MUFBs – House of Multiple Occupancy and Multi-Unit Freehold Blocks. These are specific Buy-to-Let (BTL) mortgages where the property is often let on multiple tenancy agreements. The mortgages tend to come with higher interest rates and the properties are generally more expensive. This is because the rental yield on an HMO can be huge! In the right area, HMO properties can be a great investment. Student properties are commonly HMO properties and many of us will know how lucrative these can be for the landlord… As food for thought, depending on your location and a potential necessary planning permission application, you can actually convert a standard BTL property into an HMO BTL if you wanted to.

Ltd Company – Buying rental properties through a limited company may be a tax-efficient method of purchasing your properties, particularly if you’re looking to build a substantial portfolio. The interest rates are higher for limited company mortgage products however profits from the limited company can be taxed at a lower rate hence making this a smart move depending on your circumstances. Just as with standard BTL properties, HMO/MUFB properties can be purchased through a limited company too.

Portfolio – While it can sometimes be less, a 25% deposit is typically required for purchasing a rental property. Therefore, for every rental property someone has without a mortgage, they could have four comparable properties if they mortgaged them all – that’s four times the rental income! Now obviously there are then four mortgages to be paid but leveraging assets like this is how most people will build a large property portfolio. Many lenders are willing to lend to landlords with double-digit property portfolios so if you want to know more about BTL portfolio products, we can help!

Holiday Lets – While the COVID-19 pandemic hit the Holiday Let market hard, the rise of staycations and people taking their holidays in the UK mean purchasing a holiday let may be a great investment. There are specific holiday let mortgages available which are different to typical BTL mortgages. Specifically, they factor in variable/seasonal income as is the case with a Holiday Let.

Bridging Finance – In certain situations, a residential mortgage or a BTL mortgage is not possible. A bridging loan can act as a short-term solution to allow you to purchase land or property, renovate, build or in various other circumstances. We have direct access to bridging lenders so can assist you with this process where necessary. While interest rates and charges are generally higher than on typical mortgages, a bridging loan is often easier to get than a mortgage and hence they can be a great way to get you from A to B if you’d otherwise be stuck.

If you’re concerned about what type of mortgage you need, whether you’ll be able to secure a mortgage on the property in question or even whether it could be worthwhile leveraging your assets through mortgages, speak to us for some free, professional advice.