Consumer Buy To Let Mortgages Explained: A Complete Guide
This article will explore how a consumer buy-to-let mortgage could be the right choice for you. We will help you decide if this option is right for you and explain how getting expert help can be important in getting the best rates.
What exactly is a consumer buy-to-let mortgage?
A consumer buy-to-let mortgage, also known as a ‘CBTL,’ is a special financial product for accidental landlords, like those who inherit property or rent out their previous home.
As it’s regulated by the Financial Conduct Authority (FCA), it provides the consumer with a similar level of protection as a residential mortgage, taking into account the owner’s circumstances rather than the possible rental income.
This specific type of mortgage, established in 2016, is designed for:
A consumer buy-to-let mortgage is defined as:
A buy-to-let mortgage contract which the borrower does not enter into wholly or predominantly for the purposes of a business carried on, or intended to be carried on, by the borrower.
As per the Mortgage Credit Directive Order 2015
This mortgage type is a part of financial services regulated by the Financial Conduct Authority, offering consumer protection. It’s essential to consult a mortgage broker or lender authorised and registered in England to discuss your eligibility and the mortgage repayments for a consumer buy-to-let property.
What are the differences between a consumer buy-to-let and a regular buy-to-let mortgage?
The main difference between a consumer buy-to-let mortgage and a conventional buy-to-let mortgage lies in regulation. The consumer buy-to-let mortgage, also known as CBTL, is regulated by the Financial Conduct Authority (FCA), which provides an extra layer of protection. This is particularly useful if you have inherited a property and unexpectedly become a landlord, as it offers additional assurance.
Classic Buy to Let Vs Consumer Buy to Let
| Classic Buy to Let | Consumer Buy to Let | |
| Preferable for | Individuals intending to venture into the rental business, including confirmed landlords. | Accidental landlords or those letting property to family members. |
| Regulatory entity | Not supervised by the FCA. | Regulated by the Financial Conduct Authority, akin to a residential mortgage. |
| Living requirement | No condition to have lived in the property prior to application. | The property must have served as a dwelling for you or a family member since its acquisition. |
| Application rigour | Less rigid application requisites than the CBTL. | Stringent application demands, much similar to qualifying for a consumer buy-to-let. |
In these scenarios, your trusted mortgage broker, authorised and regulated by the financial conduct, can guide you through, offering consumer-friendly buy-to-let property options that best suit your needs.
It’s essential to remember, though, that failing to keep up with your consumer buy-to-let mortgage repayments – just like with a regular or residential mortgage – can put your property at risk.
As a landlord, whether accidental or intentional, understanding these differences can help you secure the right kind of mortgage from the appropriate lender registered in England.
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Eligibility criteria
To be suitable for a consumer buy-to-let mortgage, there are certain criteria you must meet:
Lenders, while considering your mortgage application, would scrutinise your predicted rental income rather than your personal income. They’ll require that this rental income stands at a minimum of 125% of the mortgage repayments to ensure your affordability of the loan.
Other factors that will be assessed include your financial inflow and outflow, age, debt level, the deposit amount available, and your credit history. It’s crucial to note that the deposit or Loan to Value (LTV) prerequisites for a consumer buy-to-let mortgage differ from those of a residential mortgage. For consumer buy-to-let mortgages, the maximum LTVs usually gravitate around 75%.
Your mortgage broker will guide you through these complexities to ensure that you are fully conversant with the regulations of applying for a buy-to-let mortgage. This area is authorised and regulated by the Financial Conduct Authority (FCA), the body that regulates financial services in the UK and is registered in England.
Therefore, consumers must appreciate the specifics of a buy-to-let mortgage and understand the full implications of the regulations before proceeding.
So, whether you’re an accidental landlord who has inherited a property or someone who simply wants to maximise your income, understanding the eligibility criteria for a consumer buy-to-let mortgage can significantly affect your financial stability and success in the rental market.
How to get a consumer buy-to-let mortgage
If you believe you are a suitable candidate and wish to secure a consumer buy-to-let mortgage contract, don’t hesitate to contact us. We provide a unique service where we match you with experienced mortgage advisors who are experts in this particular mortgage type.
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Which lenders offer these mortgages?
Unfortunately, mortgage providers like Vida Home Loans, Natwest, and CHL Mortgages do not offer consumer buy-to-let mortgages, which limits your options for lenders.
However, there is a significant number of mortgage providers that do engage in such practices. For example, well-known high street lenders like Metro Bank, TSB, and Santander are willing to review applications, as are specialist lenders such as Teachers Building Society, BM Solutions, and InterBay Commercial.
To identify the best mortgage provider that satisfies your specific needs, we recommend reaching out to us. We’ll get you matched with a consumer buy-to-let mortgage expert broker. These brokers are experts in the mortgage market and have access to lenders you may not be able to find independently. Plus, they’re committed to comparing the entire market to ensure you get the best possible deal and meet all the criteria for a consumer buy-to-let mortgage.
Speak to a Buy To Let Mortgage Broker
Maximise your chance of approval with a specialist in consumer buy-to-lets expert.
