IMB Blog

Regulated v’s Non-Regulated Mortgage Contracts

If you’re looking for a buy-to-let (BTL) mortgage. You may soon discover that the market has changed drastically in recent years. The government has rehashed many of the taxation incentives that previous landlords had access to. Also stamp duty (SDLT) increases and changes to lender criteria mean that owning a buy-to-let property is even more complex than ever before.

One massive change has been a new type of buy to let mortgage or scheme, the consumer buy-to-let – a type of regulated borrowing predominantly for a buyers known as ‘accidental landlords’ and people who want to let a property to members of their family. Other traditional buy to let mortgages have always been unregulated by the Financial Conduct Authority (FCA).

We will discuss below the following areas:

  • What is a consumer buy-to-let mortgage?
  • What is the difference between a traditional buy-to-let mortgage and a consumer buy-to-let mortgage?
  • Why it is a good idea to know how your credit profile looks to buy to let lenders
  • Why we suggest you speak to a knowledgeable Independent Mortgage Broker

What Is a Consumer Buy-To-Let Mortgage?

We would now like to explain what exactly a consumer buy-to-let mortgage is. It simple terms a consumer buy-to-let mortgage is a type of mortgage for someone who has become an ‘accidental landlord’ – an example being, you inherited a property or moved in with your partner and rented out your property in the short-term. Whereas, buy-to-let mortgages on the other hand are not regulated by the Financial Conduct Authority (FCA), however, the consumer buy to let mortgage contract is regulated like a traditional residential mortgage you have on the home you live in.

The Financial Conduct Authority (FCA) that regulates the financial services industry in the UK. introduced this new legislation in 2016 it is supposed to provide greater protection for borrowers who may not have intended to be landlords and, therefore, might be more vulnerable. The FCA’s main role includes protecting consumers, keeping the industry stable, and promoting healthy competition between financial service providers. The FCA works with HM Treasury

If, however you buy a property with the intention of letting it to a family member or being a landlord isn’t your main occupation, this could also be classed as consumer buy-to-let.

What Is The Difference Between a Traditional Buy-To-Let Mortgage And a Consumer Buy-To-Let Mortgage?

The main differences between the two types of buy-to-let mortgage comes down to, the reason they need the buy-to-let mortgage in the first place, for arguments sake if you purely by accident become a landlord. The major difference is the way that the 2 schemes are regulated. The option of the consumer buy-to-let is largely geared towards accidental landlords and people who intend to let to close family members, however on the other scheme or a more traditional standard buy-to-let is aimed at pretty much all customers who are looking to invest in property for profit and take on the n investment property to let to tenants that are not related to them at all. You could be looking to let your property to a young couple, or a family, or someone who is claiming department of works and pensions benefits, or maybe even you may wish to provide student accommodation. Whatever your intention the main difference is the consumer buy-to-let products are aimed at accidental landlords, or people that have decided to rent their main residence out rather than sell it before thy move to the next property.

Why It Is a Good Idea To Know How Your Credit Profile Looks To Buy To Let Lenders

Knowing what your credit file looks like when applying for a buy-to-let mortgage is very important. You need to ensure that your credit profile is looking as good as it could do. There are opportunities for buy-to-let landlords to obtain mortgages with a less than perfect credit profile, but it will be much simpler for you and your independent mortgage brokers to know where they need to begin to look, prior to you or them making any applications on your behalf. There are many ways to check your credit file, the three main credit reference bureaus are Experian, Equifax & TransUnion, although there are multi-agency credit agencies that will provide information held on you from all of the three main agencies, companies like checkmyfile. If you see anything that shouldn’t be on your credit file, you need to act swiftly to try to get this removed before you retain the services of your independent mortgage brokers. We asked a local firm Independent Mortgage Brokers based in Halifax – West Yorkshire if they had any hints or tips in regards to why it is important to check your credit file before you apply for a buy-to-let mortgage. A source at the company advised it is massively important to know where you are before you begin the journey of pursuing your buy-to-let dreams. The source went onto say that, so many people don’t even realise that their credit has been affected by something as trivial as a missed mobile phone payment or a missed payment on the gas bill. The credit file is the only real way that a lender can see what a customer is like and how they manage their personal finances. If there are missed payments all over the credit file the likelihood is that you’re going to need a bad credit buy-to-let mortgage.

Why We Suggest You Speak To a Knowledgeable Independent Mortgage Broker

If for whatever reason you have now become an ‘accidental landlord’ or you maybe want to let a property to one of your family members, a solution could be a consumer buy-to-let mortgage, however it will pay dividends to retain the services of a professional advisor before you make that decision. When choosing your mortgage broker, you really need to ensure you’re speaking to the right broker. Make sure your independent mortgage broker is one who specialises in consumer buy to let mortgages.

At Independent Mortgage Brokers based in Halifax – West Yorkshire they do specialise in providing consumer buy-to-let mortgages and also are able to provide 5 stars rated excellent on Trustpilot service. They really do go the extra mile for their customers, ensuring that all of their buy-to-let customers are kept up to date with industry news and are able to use their professional contacts to enable them to assist you in getting your buy-to-let mortgage. They will offer you expert advice, help you find the best mortgage product for your needs and circumstances and guide you through the application process. Call 0333 210 0082 or make an enquiry for a free, no-obligation chat for you perfect broker today.

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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 our Independent Mortgage Brokers to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisers working for or with Independent Mortgage Brokers are fully qualified to provide mortgage advice and authorised and regulated by the Financial Conduct Authority. All our independent Mortgage Brokers will offer advice specific to you and your needs and circumstances. 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.

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