Looking to secure your first buy-to-let mortgage? Finding the best lender for your requirements can be tough, and securing a mortgage with them can be even tougher. 

Here’s a few tips for tracking down the best mortgage lender; and what you always should do before you apply.

1. Understand lender types

Before applying for a mortgage, it’s helpful to understand the different types of lenders and what each one can offer.

Generally speaking, high street lenders (aka retail banks) tend to offer a more nationwide presence, with branches where you can sit down and discuss your lending requirements in person. If you’re already a customer of the bank, you might get access to cheaper deals, too.

On the flipside, their mortgage rules and criteria are often less flexible; particularly when it comes to SPV mortgages. Plus, the number of mortgage products each lender offers may leave a lot to be desired.

Building societies can often offer less demanding terms and better rates; but sometimes you’re better off going to a specialist lender.

Specialist lenders usually cater to specific lending needs and complex scenarios (such as SPV buy-to-let mortgages, HMO/MUFB purchases, bridging loans, or entrepreneurs and freelancer buyers with more complicated income structures.

Despite this, the process of applying for a mortgage with them usually isn’t too much more difficult or time-consuming than applying to a regular high street lender. 

In fact, since their operations are often more streamlined with fewer overheads, they may be able to get you a cheaper deal much faster.

So what’s the catch? Well, some specialist lenders charge higher fees than you’d get with a retail bank; and since they don’t have the same level of resources as the big names, you may find that their performance in some areas (e.g. customer service and resolving disputes) may be a little lacking.

2. Check you meet lender criteria

Imagine finding the perfect mortgage deal, going through the whole application process – and then getting immediately turned down by the lender because you don’t meet their most basic requirements.

Buy-to-let investors like yourself simply can’t afford to waste time on lenders who are never going to give you the time of day. Thankfully, you can often get the broad strokes of each lender’s eligibility requirements with a little bit of research. 

Plus, many lenders enable you to carry out a soft eligibility check by filling in a few questions on their website; or you can request a ‘mortgage in principle’ (also known as an agreement in principle or mortgage pre-approval) which lets you see exactly how much you might be able to borrow.

3. Compare like-for-like deals

Who has time to compare all the mortgage deals on the market? 

Not property investors, that’s for sure.

When comparing lenders, don’t compare all their different mortgage products against all other lenders’ mortgage products. It’s not only a time sink, but also some lenders may be missing certain product options; so your comparisons will be heavily skewed and you’ll probably end up more confused than you started.

Instead, narrow down the type of mortgage product you’re after first. Are you looking for a two-year fixed deal or a five-year fixed deal? Maybe you’d prefer a standard variable rate or tracker rate instead? What other boxes does your mortgage product need to tick for you?

Once you know what you’re after, you can seek out lenders who offer those kinds of mortgage products and only compare the lenders who can definitely give you what you want.

4. Compare prices the right way

So, you’ve got a shortlist of lenders you’re interested in; how do you choose the right one for you?

Finding the cheapest one is a good starting point.

All mortgage product quotes include APRC (annual percentage rate of charge); a calculation of how much you’ll pay each year over the entire lifetime of the mortgage (including fees). 

If the lender plans on switching you onto a variable rate at any point during the mortgage lifetime, the mortgage offer or recommendation must also include a second APRC figure (known as APRC2). This shows how much you’d pay based on the highest variable rate of the past 20 years.

Unfortunately, these figures aren’t much use to savvy property investors, as they assume you’ll keep the mortgage for the entire term (whereas refinancing onto cheaper deals after the fixed term expires is often a much smarter choice).

You’re better off tallying up the repayments and other costs of keeping the mortgage for the fixed term (or, if you go for a variable rate from the start, however long you plan on keeping it) minus any reliefs. 

Once you’ve done that for all the lenders you’re interested in, you’ll know the cheapest; although this won’t necessarily be the best. We’d personally recommend making a short-shortlist of the 5 or 10 cheapest lenders, and then seeing which ones work best for your needs.

5. Seek out help from a professional

Does all this sound like a lot of work?

Well, you’re not wrong!

The value of getting a professional involved in the process really cannot be overstated; whether it’s a mortgage broker like us here at SPV Mortgages, or even just an adviser at the lender or your own local bank.

Buy-to-let investors who rely on professionals to help them find the right mortgage lender can save countless hours and avoid wasting time on fruitless deals. Instead, that’s time they can spend doing what they do best; making money from their investments.

Ready to start your property investing journey? SPV Mortgages can get you pre-approved with hundreds of lenders across the market with just a few quick questions. Get in touch to arrange a phone call today.