Owning a property is an aim held by many, and owning further properties to rent out and earn a secondary income is a dream that can become a reality, with the right mortgage partner and broker. In this blog post, we’ll explore the realm of mortgage affordability with a focus on buy-to-let mortgages from BM Solutions, a prominent player in the mortgage industry and formerly known as Birmingham Midshires. Understanding how BM Solutions assesses mortgage affordability can empower you on your journey to property ownership as a buy-to-let landlord.
The Power of BM Solutions and Birmingham Midshires
As part of the well known Lloyds Banking Group, BM Solutions has made its mark as a dynamic mortgage provider specifically for buy-to-let purchases and remortgages. Once known as Birmingham Midshires, BM Solutions offers competitive buy-to-let loans and products to a wide range of borrowers with differing mortgage needs, making them a go-to choice for many qualified and experienced mortgage brokers.
The Basics of BM Solutions Mortgage Affordability
Mortgage affordability is the cornerstone of successful property ownership and is very important when it comes to purchasing an investment property. It’s the process through which lenders like BM Solutions evaluate whether you have the financial means to make regular mortgage payments and make money on your buy-to-let property. The evaluation considers a variety of factors, including in most cases your income, the rental income that you either currently receive or expect to receive from the property, your expenses, credit history, and the loan amount you’re looking to achieve.
Income Assessment
BM Solutions takes a meticulous approach to income assessment as they want to make sure that you can still afford to keep up with the mortgage payments, if anything should go wrong with the tenants of the property and your buy-to-let income. They typically consider your stable, verifiable income sources, such as your salary or self-employed earnings. As with most mortgage lenders, they will normally need to see 3 months payslips or 2 years worth of trading figures if you are self-employed. This step helps them determine if you have a consistent income that aligns with the mortgage you’re seeking. All applicants will need to earn an income, but BM Solutions do not actually have a minimum income requirement, as long as the loan is still affordable.
Expenses
Understanding your monthly expenses is crucial for lenders to ensure that your mortgage payments won’t strain your finances. BM Solutions assesses your existing financial commitments, including debts, living expenses, and other financial responsibilities and makes sure that your debt won’t be too much for you to handle per month. This analysis also helps them gauge how much of your income is available for mortgage payments, should your rent received from tenants stop covering it for any reason.
Credit History and Score
Your credit history and score will of course be a big factor with any mortgage lender and will provide insights into your financial behaviour. BM Solutions will review your credit report internally through their systems to assess your creditworthiness. A favourable credit history can improve your chances of securing a mortgage with competitive terms. Generally BM Solutions do not accept applicants who have had recent credit issues.
Loan-to-Value (LTV)
BM Solutions, like many lenders, considers the Loan-to-Value ratio, which is the proportion of the property’s value that you’re looking to borrow. A lower LTV ratio often results in more favourable interest rates, as it signifies a smaller risk for the lender. So for example, a borrower with a 50% deposit may be able to achieve a lower rate than someone with a 25% deposit. At the time of writing this blog, the lowest rate for a 50% LTV buy-to-let product with BM Solutions is 5.29%. Whereas the lowest interest rate for a 75% LTV buy-to-let product is 5.58%. To go through up to date and more specific BM Solutions mortgage products, drop our advisors a message today. The maximum loan-to-value that BM Solutions currently offers is 75% LTV.
Affordability Calculators
To make the process more transparent and accessible, BM Solutions provides online affordability calculators that your mortgage broker will run for you. These tools allow you to estimate how much you might be able to borrow based on your income, the rent you will receive from the property, your current expenses, and any other relevant information. While these calculators provide a rough estimate, keep in mind that the final decision will depend on a thorough assessment by BM Solutions’ mortgage experts and of course, your credit history.
Speak To a Buy-to-Let Mortgage Broker
For those considering a buy-to-let purchase or remortgage, partnering with a specialist buy-to-let mortgage broker who has access to lenders like BM Solutions can make all the difference. At Oportfolio, our job is to help you to find the most competitive and most sensible mortgage solution for you. With access to the whole of market, we can help you to find the best deal available for your circumstances. Call our team today or drop us an email to see how we can help you today.
