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By Pete Mugleston | Mortgage Advisor

Pete has been a mortgage advisor for over 10 years, and is regularly cited in both trade and national press.

Updated: 24th June 2020*

You may have found getting a buy to let (BTL) mortgage difficult in Northern Ireland, especially if you have never been a landlord before and are unsure about the process.

We have helped countless customers find the right buy to let mortgage, even for properties in rural areas with non-standard construction.

The advisors we work with operate on a ‘whole-of-market’ basis and can take you through the process from start to end, even if you’ve been declined a mortgage or have bad credit.

To give you key information you need about buy to let mortgages in Northern Ireland, we’ve created this handy guide.

Once you’ve read through the information here, if you’d like to speak with an advisor we work with in more detail about buy to let mortgages in Northern Ireland give us a call on 0808 189 2301 or make an enquiry and we will arrange for someone to get in touch.

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Where are the best buy to let areas in Northern Ireland?

If you decide to buy a property to let out in a popular city in Northern Ireland, for example, Belfast, you may find it easier to find tenants. Demand for rental properties will be higher, so you’ll be able to charge higher rental payments too.

Before purchasing though, it can be helpful to calculate the ‘rental yield’ as the money made from rent might not always outweigh the costs of the initial purchase.

Across the market, a rental yield of 7% or more is seen as good because, typically, a higher rental yield suggests that you can make a profit after paying your mortgage payments, insurances and running costs.

How do I calculate the rental yield?

To do this you need to decide on how much rent you would charge per month. If you are unsure of how much to charge, look at property portals such as Zoopla or Rightmove and search for properties in the area to compare estimated rental fees.

One you have this figure, divide it by the market price of the property and multiply by 100 to give you your rental yield percentage.

For example, if you were to charge £750pm in rent for a property worth £130,000, you would use the below calculation:

Rent (750) / property value (£130,000) = 0.0053

(x 100) = 5.7

Buying a property in an ‘up and coming area’ of Northern Ireland

As well as rental yield, you may also wish to consider the ‘capital appreciation’ of the property, which is a term used to describe how much the property will increase in value overtime.

This can be quite risky as there is no certainty on how much the property will increase in value and of course, it could also decrease in value.

Many landlords buy property in ‘up and coming’ areas with the aim of selling the property in a few years time to make a profit. Another benefit of this is that often properties in these areas are initially cheaper and therefore less of an investment. You may also find it harder to get tenanted and/or may need to let it out for lower rent than intended.

Get the right advice from a broker in your area

If you need advice on where to invest your money for a buy to let property in Northern Ireland, talk to an advisor who is local to the area you are considering, or has previously sold property and understands the local market.

Many brokers claim to be whole of market but unfortunately lack the knowledge needed to accurately advise about which areas are selling well and where the demand for rental property is high.

If you get in touch we can arrange for you to speak to an advisor who operates in your area and, therefore, can provide the local knowledge you’re looking for.

What deposit will you need for a buy to let mortgage in Northern Ireland?

Buy to let mortgages can often require a higher deposit as some lenders view these mortgages as riskier compared to standard residential mortgages.

This is partly because as a landlord, your mortgage payments rely heavily on your ability to get tenants and also the likelihood that those tenants will pay their rent in full and on time.

Depending on your circumstances, most buy to let mortgage lenders ask for a minimum 25% deposit. This can increase if your financial situation is more complex with issues such as ‘bad credit or the mortgage term running into your retirement years.

Can property type affect your deposit size?

Yes, some buildings which are viewed as ‘non-standard properties’, including those that are grade 2 listed, have thatched roofs or timber frames, and they can be more difficult to maintain and also to resell in the event of repossession.

To calculate your deposit size for a buy to let mortgage in Northern Ireland, talk to a mortgage advisor who can take the time to look at your situation and compare the current market rates, along with the conditions of each lender.

Is it harder to mortgage a property in a rural part of Northern Ireland?

The demand for properties in rural areas can be lower compared to the demand for properties in cities which can make them a lot harder to resell if a lender has to repossess.

As well as this, it can be more difficult to find tenants for buy to let properties in less popular areas as there are naturally less people. This is another risk as with no tenants, you might not be able to afford your mortgage.

There may also be fewer lenders to choose from in rural areas, which can result in less favourable interest rates or mortgage terms.

However, the good news is that there are lenders who, in the right circumstances, are more willing to approve a mortgage for buy to let property in rural areas in Northern Ireland and the brokers we work with can help you find them.

How do lenders calculate your affordability for a buy to let?

To assess whether you can afford to pay your mortgage, even in the event that you are unable to find a tenant, lenders will ask questions about your income, age and experience of being a landlord.

Typically buy to let lenders will require your rental income to be 25–30% higher than your mortgage payment as the additional income can be used for property maintenance or other costs associated with being a landlord.

To give an example, a landlord with a mortgage of £600 would need to charge at least £750 a month to his tenants. This is not an exact science and all lenders have their own affordability calculations.

For more information about how lenders calculate your affordability in Northern Ireland for a buy to let mortgage, contact a member of our team for more information.

Should I get advice before applying for a BTL mortgage in Northern Ireland?

This is highly recommended as only a certain number of mortgage providers will lend for properties in Northern Ireland, which means the most favourable rates and terms are much harder to come by without whole-of-market advice.

Seeking advice from a specialist can save you time and money as well.

The brokers we work with have access to hundreds of buy to let mortgage providers in Northern Ireland and upon talking to you, will know the best ones to suit your specific requirements.

Looking for buy to let mortgage providers in Northern Ireland? Let a broker do the legwork for you!

If you have any questions about buy to let mortgages for properties in Northern Ireland and want to speak to an expert, call Online Mortgage Advisor today on 0808 189 2301 or make an enquiry.

Updated: 24th June 2020
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FCA disclaimer

*Based on our research, the content contained in this article is accurate as of most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The info on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs. Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.