Summary
We recently helped our customer arrange a buy-to-let mortgage in Kent to purchase a £300,000 house.
The case needed some additional research because our customer was a first-time landlord and the property was being bought through a concessionary purchase. We therefore needed a lender whose buy-to-let criteria could accommodate both points while providing the level of borrowing required.
We found a lender that could accept the structure of the purchase and the customer’s first-time landlord status, allowing the £225,000 mortgage to proceed.
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The Scenario
Our customer was looking to purchase a house in Kent as a buy-to-let investment.
Those involved were aged 35 and 38. One was self-employed and the other was employed. Their income was at a lower level, but their credit history was good and there were no liabilities recorded in the information provided.
The property was valued at £300,000 and our customer required a mortgage of £225,000 over a 30-year term.
The main figures were:
- Property value: £300,000
- Mortgage amount: £225,000
- Loan-to-value: 75%
- Mortgage term: 30 years
- Mortgage type: Buy-to-let purchase
- Customer status: First-time landlord
- Credit history: Good
- Final product secured: 2-year fixed rate
Although the figures themselves were relatively straightforward, the way the property was being purchased meant we needed to look carefully at lender criteria.
The Challenge
The main challenge was finding one lender that could accept the combination of a concessionary purchase and a customer becoming a landlord for the first time.
Concessionary purchase
A concessionary purchase is where a property is being bought for less than its normal market value.
This type of transaction can be treated differently from a standard property purchase. Mortgage lenders have their own rules around concessionary purchases, including whether they will accept them at all and how they assess the value and deposit position.
For our customer, it was therefore important to find a lender whose buy-to-let mortgage criteria allowed this type of purchase.
First-time landlord
Our customer was also becoming a landlord for the first time.
Not every buy-to-let lender treats a first-time landlord in the same way. Some lenders are more comfortable with existing landlords who already have experience owning and letting property, while others will consider someone purchasing their first investment property.
We therefore had to make sure that the lender was comfortable with our customer’s lack of previous landlord experience.
Loan-to-value requirements
The case information also identified loan-to-value as an important consideration.
Loan-to-value, usually shortened to LTV, compares the size of the mortgage with the value of the property. Based on the final figures, the £225,000 mortgage against the £300,000 property represented 75% LTV.
This needed to fit affordability alongside the lender’s rules for both the concessionary purchase and a first-time landlord.
The challenge was therefore not simply finding any buy-to-let mortgage lender for the property in Kent. The lender needed to accept all of these circumstances within the same application.
What We Did
We started by reviewing how the property was being purchased and the customer’s position as a first-time landlord.
This allowed us to focus on lenders whose criteria were relevant to the actual transaction rather than simply comparing products based on their headline interest rates.
We needed to find a lender that could:
- Accept a concessionary purchase
- Consider a first-time landlord
- Provide the required mortgage amount
- Accept the loan-to-value of the final transaction
- Consider the customer’s overall circumstances
This was important because a lender being comfortable with one part of the application did not automatically make them suitable.
For example, a lender may offer competitive buy-to-let mortgages but restrict concessionary purchases. Another lender may allow concessionary transactions but have different criteria for someone buying their first rental property.
By checking how these requirements worked together, we were able to identify a lender whose criteria matched the whole case.
The Solution
We found a lender that could accept the concessionary purchase and was also comfortable lending to a first-time landlord.
This provided our customer with a route to proceed with the purchase of the £300,000 property.
The final mortgage arranged was:
- Property value: £300,000
- Mortgage amount: £225,000
- Loan-to-value: 75%
- Mortgage term: 30 years
- Mortgage purpose: Buy-to-let purchase
- Initial product: 2-year fixed rate
Why the Solution Worked
The lender’s criteria matched the main requirements of the application rather than only part of the case.
In particular:
- The concessionary purchase was acceptable, allowing the property transaction to proceed using this structure.
- The lender accepted a first-time landlord, meaning previous landlord experience was not required for this particular application.
- The required £225,000 mortgage was achievable against the £300,000 property value.
- The 75% loan-to-value fitted the final transaction, allowing the borrowing requirement to be met.
- The lender could consider the overall circumstances, including the customer’s employment and self-employed income positions.
This combination of criteria was what allowed the case to move forward.
The Result
We successfully secured the buy-to-let mortgage our customer needed to purchase the house in Kent.
A mortgage of £225,000 was arranged over 30 years, with an initial 2-year fixed rate.
The lender accepted both the concessionary purchase and our customer’s position as a first-time landlord, which were the main points that needed to be addressed when researching the mortgage.
Our customer was very happy with the result.
What This Case Shows
This case shows that buying your first rental property can require more careful lender research when the transaction does not follow a standard purchase structure.
Being a first-time landlord does not automatically prevent someone from obtaining a buy-to-let mortgage, and some lenders can also consider a concessionary purchase. The important point is that lender criteria vary, so the same case may be viewed differently from one lender to another.
Where several requirements need to work together, it can be useful to check the lender’s full criteria before making an application rather than choosing a mortgage based on the interest rate alone.
Need Help with a First-Time Landlord Mortgage?
If you are looking for a buy-to-let mortgage for your first rental property, or you are buying through a concessionary purchase, Kerr & Watson can review your circumstances and look at lenders whose criteria may be suitable.
We can help you understand the available first-time landlord mortgage options and how lenders may approach the way your property is being purchased.
Contact Kerr & Watson to discuss your buy-to-let mortgage requirements and the options that may be available for your circumstances.
