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Trusted advisors for regulated Buy-To-Let Mortgages.
Worried about renting to a close family member? Don’t be; regulated family buy-to-let mortgages are simple. If you’re looking for clear, expert guidance, fill in your contact details and talk to our expert mortgage advisors today! We are the UK’s leading mortgage brokers, offering tailored advice from the start to the end of the mortgage application process.
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What is a regulated buy-to-let mortgage?
A regulated buy-to-let mortgage is a loan taken out to purchase a home that is intended to be used by immediate family members – meaning your sibling, parent, child or grandparent. Also known informally as a family buy-to-let mortgage, the arrangement is seen as a grey area and a possible conflict of interest between clients and lenders, marking them as higher risk.
If it’s a family buy-to-let mortgage, lenders are concerned that since tenants are family, lenders are concerned that leeway will be given in events such as missed monthly mortgage payments, making it harder for the lender to make the money back. Mortgage rates are also tallied against personal income for regulated mortgages, not projected rental income. After all, typically, the arrangement is cheaper for the family, as the borrower tends not to charge full market rent, do less maintenance and skip landlord insurance.
What is the "regulated" part of these family buy-to-let mortgages?
A regulated mortgage is regulated by the FCA (Financial Conduct Authority), unlike a standard buy-to-let mortgage, because of the grey area in which it exists. A family buy-to-let mortgage has to be regulated because it is neither:
- A residential mortgage – It’s a residential property, but not a residential mortgage because you don’t live there.
- A commercial mortgage – The arrangement revolves around a family who are likely not going to make them pay rent at market rate, and are also likely to forgive missed payments, making it miss out on commercial criteria too.
Both of these are protected by statutory and common law protections. A family buy-to-let mortgage, then, is without protection, prompting the FCA to ensure the borrower cannot be exploited. It mandates the following:
- Affordability checks – Based on personal income.
- Advised sale required – The mortgage must be recommended by a qualified advisor, such as an FCA authorised mortgage broker.
- Disclosure requirements – Lenders just provide clear and transparent information.
- Complaint rights – Borrowers can escalate issues to the financial ombudsman service.
- Lender authorisation – Only FCA-authorised lenders can offer regulated BTLs.
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Who gives regulated buy-to-let mortgages?
Most lenders typically see regulated buy-to-let mortgages as high risk for all the reasons we’ve stated beforehand, meaning many mainstream lenders will close their doors to the idea immediately. This is where When the Bank Says No comes in. We are professional mortgage brokers who act as middlemen between borrowers in unique circumstances, such as regulated BTLs and mortgaging with adverse credit, and lenders.
Our expert team has a network of specialist lenders that we can give you a choice of after we review your situation and mortgage application. If you want to rent your property to a sibling, parent or child, someone from our experienced mortgage broker team will seek out the most appropriate mortgage lender and regulated loan deals for your situation.
Turning Your Nightmares Into Dreams
When you think you’ve hit that brick wall and have all but given up hope of finding mortgage finance, When the Bank Says No are here to turn your ‘No’ into a ‘Yes’. We have access to a range of specialist lenders who are willing to help those that the High Street banks just won’t touch. Get in touch today and see how we can turn your dreams into a reality.
Frequently Asked Questions
How Much Deposit Is Required For A Regulated Buy-to-Let?
As family buy-to-let mortgages are considered riskier by mortgage lenders than a standard buy-to-let or a residential mortgage, the expectation is that the required deposit will be a higher amount than normal. The majority of lenders will require a deposit of around 25% of the property value, although certain lenders will want an even larger deposit if you have any adverse entries on your credit record. This means that most lenders will not lend any more than 75% loan-to-value (LTV) on regulated buy-to-let mortgages.
As expert mortgage brokers, we can often negotiate on your behalf to obtain a better deal for you. If you are in a position where you can provide a higher deposit, then this may help you access better mortgage deals with lower rates of interest or more preferential terms.
What Can I Do If A Family Member Moves Out Of My Regulated Buy-to-Let Property?
If the family member you are renting to moves out, you will still be liable to make the payments on the loan amount. If you’re interested in turning it into a buy-to-let property, you may be able to remortgage a conventional buy-to-let mortgage. Regulated buy-to-let mortgages don’t tend to come with the most attractive lending rates, so making the switch to a standard buy-to-let mortgage when possible can be a great idea.
Whatever the situation, our friendly advisors will be more than happy to discuss the ins and outs of remortgaging in more detail. Talk to us whenever is convenient for you, and we can start the process and get you access to the right specialist lenders!
Can I Sell A Regulated Buy-to-Let Property To A Member Of My Family?
Yes, you can sell to family members. The family member simply needs to apply for a standard residential mortgage for the property. Alternatively, if you wanted to give the family member a discounted price below market value, they could apply for a concessionary purchase mortgage. This would allow them to use the discount as their deposit and may make the purchase easier for them financially. For that reason, this is a popular option for parents selling a property to their children.
Can I Rent My Second Home To My Children?
If you own your second home outright and there is no mortgage on it, you are free to do whatever you want with it. However, if the property has either a standard residential mortgage or a standard buy-to-let mortgage, you will not be permitted to let this to an immediate family member. You are likely to be in breach of your mortgage conditions if you do so.
The best thing to do in this situation is to talk to a mortgage broker about remortgaging. By switching to a regulated buy-to-let, you will be able to rent to your children without any stress.
Is The Affordability Criteria For A Regulated Buy-to-Let Mortgage The Same As A Non-regulated One?
The property market has a long lifecycle where house prices slowly rise up and beyond levels of affordability before crashing. The further along the lifecycle, the more common these kinds of arrangements become. Family buy-to-let mortgages offer security in lower rent prices and a compassionate landlord, with the most common type of arrangement being a parent renting to their child.
All in all, this allows a close relative to save money by a large amount.
Can I Get A Regulated Buy-To-Let Mortgage With Bad Credit?
Yes, there are regulated mortgage lenders offering loans even if there is adverse credit, such as missed payments, against your name. In the end, it all depends on your circumstances and the nature and date of the bad credit.
The best thing to do if you’re concerned is to talk to a specialist mortgage advisor. Of course, with poor credit, the number of deals available to you will decrease, and the interest rates you face might be higher. Because you are already looking for a specialist mortgage product, this can make the process seem incredibly difficult!
Our team has a track record of achieving success for our clients against the odds. Don’t struggle on your own; we’re here to take away the stress and make a family buy-to-let mortgage a reality.
Can I Rent My Property To My Relative For A Rental Income?
Yes, there are regulated mortgage lenders offering loans even if there is adverse credit, such as missed payments, against your name. In the end, it all depends on your circumstances and the nature and date of the bad credit.
The best thing to do if you’re concerned is to talk to a specialist mortgage advisor. Of course, with poor credit, the number of deals available to you will decrease, and the interest rates you face might be higher. Because you are already looking for a specialist mortgage product, this can make the process seem incredibly difficult!
Our team has a track record of achieving success for our clients against the odds. Don’t struggle on your own; we’re here to take away the stress and make a family buy-to-let mortgage a reality.
What Is The Difference Between Regulated Buy-To-Let Mortgages And Family Buy-To-Let Mortgages?
A regulated buy-to-let mortgage is a category of regulated mortgages, whereas family buy-to-let mortgages may not be. In the case of immediate family members, it is always regulated and protected by the FCA. But extended family does not count. It doesn’t matter how much you consider a cousin, or an uncle, etc. as a “close relative”; the mortgage will be a standard buy-to-let mortgage. This also means that the mortgage rates and terms will be based entirely on anticipated rental income.
Expert Guidance For Regulated Buy-To-Let Mortgages.
Renting to a family member can be a mutually beneficial relationship for both parties, but finding a mortgage to facilitate this can sometimes be complicated. When the Bank Says No has helped many clients apply for and achieve regulated buy-to-let mortgages. From remortgaging to a regulated buy-to-let to purchasing a property to rent to a family member, our mortgage brokers can help you figure out the best approach for your circumstances, credit history and ambitions.
What Our customers say about us
Our Customers rank us 4.6 out of 5
We feel so fortunate to have found WTBSN
We found WTBSN after landing in a really tricky situation. We were out of term on our current mortgage and our existing broker had exhausted all options to re-mortgage due to the complex nature of our holiday let property (Grade II listed, timber frame construction and above commercial). Working under considerable time pressure due to the financial penalties being imposed by the existing lender, Brian was relentless in his search for a solution that would allow us to refinance a property that was on face value mortgageable. Thankfully, he didn’t give up and nine months later, we completed on the re-finance. We feel so fortunate to have found WTBSN and would like to thank Brian and the team sincerely for going the extra mile. We couldn’t have done it without you!
Rachel Reeves
Simply the best
I will never use another mortgage broker in all my time In property, these guys are the best at communication, customer service and keeping you informed. They are a level above every other broker I’ve come across and they actually get things done.
Emma, Samantha & Ashley have been fantastic in assisting me with 2 mortgages now and they’re superb at what they do. I wouldn’t hesitate to reccommend them to anybody out there who needs a mortgage sorting.
John Burton
I have been dealing with ben
I have been dealing with Ben @ When The Bank Says No. He has been great!! Professional, kept us up to date the whole way and made the entire process so simple. I would most definitely use him again and have already passed his details on to a family member. Thank you for all your help.
Elise
Thank you for your amazing support
Thank you for your amazing support and service during a really difficult time in my life. 5* is just not enough to demonstrate the level of support received. These guys go above and beyond. A personal service, with kindness and compassion. I highly recommend. If you’re struggling with your mortgage, then have a chat to this team. I cannot thank them enough for everything they have done.
Nabila Fowles-Gutierrez
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