Buy-to-Let Mortgages in Northern Ireland

In this article, we’ll look at whether buy-to-let mortgages differ in Northern Ireland from the rest of the UK, why it can be hard to find a suitable lender, and how to secure the finance you need.

Can you get a buy-to-let mortgage in Northern Ireland?

Yes, although it can be slightly more difficult than in other parts of the UK due to fewer lenders operating in this region. However, it’s absolutely possible with the right advice and guidance from an experienced broker.

Deposit and eligibility criteria

Buy-to-let mortgages are largely the same in Northern Ireland as in the rest of the UK, and you’ll need the same deposit: around 25% as a minimum. That said, there are some circumstances specific to property investment here that can mean you’ll need more.

• Geographical restrictions – Buy-to-let properties in rural areas of Northern Ireland are classed as high risk, as the rental market can be slow and properties may sit empty. Fewer lenders offer mortgages here, so any available mortgages will typically have higher rates and require a larger deposit.
• Property Type – Many lenders shy away from properties that are considered non-standard construction. As there are many rural towns in Northern Ireland, farmhouses are fairly prevalent, and these are likely to be considered non-standard, especially if they are listed buildings or thatched roof properties.
  Not all lenders will consider HMO properties, so if you’re looking at this type of investment, your options may be even more limited. Again, a larger deposit requirement and higher rates are likely to apply if your investment property is anything outside of a typical bricks and mortar building.
• Landlord experience – It’s harder to get a buy-to-let mortgage anywhere in the UK if you’re a first-time buyer. Because there are fewer lenders in Northern Ireland, it can be very difficult to find one that’s happy to accept first-time landlords. A larger deposit may help.

Other specific criteria

If you’re planning to become a landlord in Northern Ireland, there are a few specific rules that you need to consider:

• All landlords in NI must register under the Landlord Registration Scheme. A certificate must be obtained from this scheme to offer properties for rent, containing accurate information about any rental properties you own. It costs £70 and must be renewed every 3 years.
• To operate HMO (House of Multiple Occupation) properties you’ll need to obtain a license from the local authority for the area the property falls under
• If you’re planning to use your rental property as a holiday let, you may also need to obtain a certificate from Tourism NI

How to get a buy-to-let mortgage in Northern Ireland

A smart move initially is to speak with an experienced buy-to-let mortgage broker who has a successful track record with customers in Northern Ireland. Using our free broker-matching service you can speak straight away to the right mortgage broker by simply making an enquiry online.

They’ll be able to help with:

• Understanding your chances of approval. Around a dozen lenders are offering buy-to-let mortgages in Northern Ireland, so they’ll check if you meet the eligibility criteria of these to save you from wasting time on applications.
• Local insight. From their experience, your broker may have informed views on which areas offer the highest rental yields and which are less prosperous.
• Downloading all your credit reports. A strong credit history will definitely help give your application the best chance of success.
• Gathering the correct documentary evidence. To ensure the application process runs smoothly. A rejected application will leave you with even fewer options remaining, so it’s critical to avoid mistakes.

What interest rates to expect

Interest rates are higher for buy-to-let than residential mortgages across the board, and there is no real difference in cost compared with the rest of the UK, unless, of course, you’re specifically looking at rural areas.

Rates will always vary based on your individual circumstances and the LTV (loan to value) you are borrowing at.

The table below provides an illustration of what rates you can expect currently.

The rates quoted above were correct at the time of writing and are subject to change at any time at the lender’s discretion. Speaking to a mortgage broker is the best way to keep track of the rates available at any given time.

How much will the repayments be?

Buy-to-let mortgage repayments are usually lower than residential mortgages as they’re interest-only. This means you’ll only pay the interest each month and only repay the capital at the end of the loan. How much you’ll repay depends on how much you borrow and at what rate. You can use the calculator below to get an estimate.

Which lenders offer these mortgages?

There are no dedicated lenders for the Northern Irish market, so you’ll be choosing between mortgages from some of the mainland UK-based lenders such as Natwest and HSBC, or the Bank of Ireland.

While there aren’t a huge number of mortgage providers, you shouldn’t be discouraged. A broker can still help you to find a great deal from one of the options available.

What are the best buy-to-let areas in Northern Ireland?

Rental demand varies hugely based on location, so if you’re looking for a good return on your investment, you’ll need to focus on areas where the demand and average rental values are high, such as Belfast. Considered one of the top rental locations in the UK for rental yield, Belfast offers a strong return on investment and the demand for properties has increased exponentially over the past 10 years.

Other major cities such as Dungannon, Lisburn and Omagh also offer strong investment options, as do areas with a high student population, such as Portrush and Coleraine. Generally, rental demand mimics the rest of the UK, and global trends in the sense that it is far higher in large cities that are well served by transport and amenities.

To calculate the potential rental yield on the property you’re considering buying you can use the calculator below:

Is the Rent-to-Buy Scheme available?

The rent-to-buy scheme is available in Northern Ireland, however, it is known as Rent to Own. It can be an excellent way to get a foot on the property ladder, but it wouldn’t be suitable as an investment mortgage.

It allows those with a household income below £60,000 the option to rent a newly built property at 20% below market value for up to five years, depending on the specific property. The idea is that this provides the tenant with the opportunity to save a deposit to enable them to buy the property at the end of the reduced rental period. Criteria vary from one housing association to the next, but the scheme is intended for residential purchases only, whereby the property will be used as the buyer’s main home.ㅤ

Get matched with a buy-to-let specialist in the NI market

We work with brokers across the UK, so sourcing an expert in Northern Ireland property investment couldn’t be simpler.

Whether you’re a portfolio landlord or embarking on your first investment property, get in touch today to access the best advice for your journey. Simply give us a call on 0808 189 2301 or make an enquiry.