Freestyle® Buy to Let
First things first
Why should I choose a Buy to Let mortgage?
When we developed our Buy to Let mortgage, we wanted to give you flexibility. We wanted to create a mortgage which enables you to buy more than one property. A mortgage that adapts as your needs and circumstances develop over the years.
Throughout the life of your mortgage you've got options such as a choice between variable and fixed rates, as well as the ability to make overpayments on variable rate mortgages, take payment holidays or borrow more. How you use these options is entirely up to you.
Who can apply for a Buy to Let mortgage?
UK residents aged between 25 and 64 (subject to income). Joint applicants, the employed and the self-employed. Professional landlords and guarantor applications will be considered (subject to lending criteria). Minimum employment income £20,000 for single applicants or £30,000 joint (excluding rental income).
If your loan to value is less than 75%, you will not need to provide us with employment income verification (subject to some exclusions, call us on 0845 606 6710 to find out more).
What circumstances are appropriate for a Buy to Let mortgage?
If you want to build a property portfolio that can provide you with an income in retirement, it's a cost effective way to buy up to ten properties. In fact, it's the ideal way to buy any property for investment purposes.
We do not accept Buy to Let applications for:
- properties that will have more than one tenancy agreement (multiple lets)
- sub-lets
How much can I borrow?
- We will lend up to 75% (or 65% if you are a professional landlord) of your property's value or purchase price, whichever is lower
- You can borrow between £40,000 and £500,000 in total and can purchase up to 10 rental properties (subject to lending terms)
- If you borrow less than 75% of the property value, we do not require income verification, we will only carry out the necessary credit checks
- The maximum loan on a single property is £500,000, as long as this is no more than 75% of the property value.
- Rental income must cover at least 110% of your monthly interest payment, calculated using the appropriate rate. For fixed rate products this is the fixed rate for the appropriate loan to value and for discounted products this is the variable rate applicable after the end of the discount rate period.
Buying property is expensive enough. The good news is, we can assist you with some of your costs.
Half price fees for multiple mortgages
For your first Buy to Let mortgage an arrangement fee will be payable. A booking fee will also apply on our fixed rate Buy to Let mortgages.For additional properties you will only be charged half price arrangement/booking fees on a maximum of 9 further Buy to Let mortgages within the 12 month period following Approval In Principle (AIP) stage of your first application.
These fees can be added to your loan. See our tariff of charges for full details of fees.
To get a quote for these products simply go to the Buy to Let quick quote calculator and select to see the reduced fee products.
Valuation Fee
If you use the Freestyle remortgage package you'll pay nothing for a standard valuation. This valuation is provided to us to ensure that the property is suitable as security for the loan.
For all other customers if you choose to add the valuation fee to your loan, the standard valuation fee and the valuation admin fee are reimbursed to you within seven working days from completion of your mortgage and the amount will be added to your loan.
View our valuation scales to see how much your valuation will cost.
Legal fees
Using the Freestyle remortgage package you have two options:
- Have our panel solicitors carry out the standard remortgage work
or - Select a solicitor of your choice and £250 will be refunded to you on completion
Either way the solicitor will act solely on our behalf to carry out the legal work for the remortgage. If additional non-standard legal work is required, or you require your own advice, you will need to pay for this.
For all other customers you can add mortgage legal fees of £250 to your loan. You'll need to pay your solicitor and we'll refund £250 within 7 days of your mortgage completing. £250 will then be added to your loan.
Choose your repayment term from a minimum of 1 year to the term of your mortgage - it's up to you - and you can overpay whenever you wish.
The maximum amount of fees you can add to your loan is £3,000 or 2% of your property value, whichever is lower.
Interest will be charged on your fee account at the Freestyle Buy to Let standard variable rate (or, in the case of a 50.01-65% loan to value mortgage, the Freestyle Buy to Let standard variable rate + 0.25%, and, in the case of a 65.01-75% loan to value mortgage, the Freestyle Buy to Let standard variable rate + 0.5%).
How do I repay?
You can pay interest-only - and if you do you should arrange a suitable repayment vehicle for the capital outstanding.
Alternatively, you can take a repayment mortgage, with each monthly payment covering part of the capital and part of the interest, reducing your outstanding mortgage balance each month.
How long can I take to repay?
You decide on the term of your mortgage. The minimum period is five years and it must be repaid by the time you're 69. In exceptional cases, and only if your loan to value is less than 65%, this age limit may be extended to 75 - please contact us to discuss your personal circumstances. You also have the option to make overpayments at any time on your variable rate mortgage.
How does the interest rate tiering system work?
One of the most attractive features of our Buy to Let mortgage is the tiered interest rate system. There are three tiers - the more you can deposit at the start of your mortgage the better your rate of interest will be over the term of your mortgage.
Can I mix fixed and variable rates?
Yes, you can mix fixed and variable rates.
What happens when a fixed rate or a discounted period finishes?
The rate will automatically revert to the Freestyle Buy to Let standard variable rate (or, in the case of a 50.01-65% loan to value mortgage, the Freestyle Buy to Let standard variable rate + 0.25%, and, in the case of a 65.01-75% loan to value mortgage, the Freestyle Buy to Let standard variable rate + 0.5%). We'll write to tell you how much your payments will be. At this point you could opt for another fixed rate, subject to availability and a booking fee.
What about security?
Standard Life Bank will take first legal charge over the mortgaged property which must be located in the UK. All properties must be valued and if necessary surveyed by arrangement with Standard Life Bank approved valuers. At a minimum, we require to see a standard valuation report.
What insurance cover do I need?
You must take out buildings insurance before we release your mortgage funds and it must remain in place throughout the term of your mortgage.
Will my tax situation change?
When you decide to buy to let your tax profile may change. For example, should you sell a property, any profits may be liable to Capital Gains Tax (CGT) charged at the highest rate of income tax you pay. You may wish to consider funding the properties under joint names to take advantage of two personal allowances.
Buying to let should be regarded as a long term investment. One of the advantages of this is that after three years ownership you are eligible for 'Taper' relief which will reduce your CGT bill.
Income tax is also payable on rental income you receive from your tenants. This is something you could obtain advice on from your financial adviser or your local HM Revenue and Customs office. The tax you pay is variable according to any allowed deductible expenses and your individual circumstances. A tax/financial adviser can tell you more about this.
Landlord registration
If your property is situated in Scotland then it must be registered with the Local Authority. It is an offence to let any residential property without being suitably registered. For full details visit the Landlord Registration website.
Running your mortgage
How are repayments made?
You choose the day of the month you want to make your payments. Monthly payments are made by Direct Debit.
How do I keep up to date with my mortgage?
To help you keep up with all the transactions on your account, you'll receive an annual mortgage statement, which will list all the transactions on your account. You can also request an interim statement at any time at no extra cost. Each statement will detail the overpayments and outstanding balances on your Buy to Let mortgage accounts.
What about reviews?
Should you choose a variable rate mortgage at the initial application stage, you can decide when you want to have your account reviewed. This can either be annually or when interest rates change - you can choose to alter this whenever you wish. At reviews, we will add up the total amount of all payments on your Buy to Let mortgage and recalculate your monthly payments in line with your original term. After these adjustments you are still free to make overpayments or take payment holidays in the normal manner.
Flexible options
Can I make overpayments on my Buy to Let mortgage?
You can make overpayments either regularly or as a lump sum. The effect of overpayments applies immediately because we calculate interest daily. On making an overpayment, you can choose to have your account recalculated and your monthly payments or term decreased.
With our Freestyle Buy to Let fixed rate mortgage, you can overpay up to 10% of the balance outstanding every year. Early repayment charges apply if you overpay more than 10% of the capital outstanding in 12 months, or if you repay your mortgage in full within your fixed rate period.
With our Freestyle Buy to Let discount rate mortgage, you can make overpayments of unlimited amounts. However, early repayment charges will apply if you repay your mortgage in full within your discount period.
Your overpayments will build up a Prepayment Reserve which can be borrowed back whenever you want.
An admin fee applies each time you borrow from your Prepayment Reserve and the minimum you can borrow is £1,000.
Any overpayments borrowed back are subject to lending criteria and remember, borrowing back will increase your monthly payments, interest payable and the remaining balance secured on your property.
Can I take payment holidays?
Once you've made six consecutive payments, you can take up to two payment holidays a year per property. This is subject to sufficient funds in your Prepayment Reserve and the Terms and Conditions of the mortgage offer for additional lending.
To arrange a payment holiday, just call us 22 days in advance of when you want to miss your payment.
Remember, taking a payment holiday will increase your monthly payments, the interest payable and the remaining balance secured on your property.
Options for the future
What happens if I want to buy a new house in the future?
You can purchase up to ten rental properties with our Buy to Let mortgage, subject to lending terms, in addition to a Standard Life Bank residential mortgage.
All we ask is that the combined balance of your mortgages (including your residential mortgage) with Standard Life Bank does not exceed £500,000 and that no single loan on a property in your portfolio exceeds £500,000 in value.
You can use your existing Buy to Let mortgage Prepayment Reserve to fund the deposit for a further rental property subject to lending criteria and a minimum drawdown of £1,000. Remember, borrowing back overpayments will increase your monthly payments, the interest payable and the remaining balance secured on your property.
If you require additional funding, we will be happy to consider your application. Call us direct on 0845 606 6710 for further information.
What if I need to borrow more money in the future?
Buy to Let mortgages are flexible enough to keep pace with changes in your circumstances. If the value of your property increases or you are earning more than you did when you first took out your Freestyle Mortgage, you could find that you qualify for a Credit Re-assessment - which may mean you could borrow more. A Credit Re-assessment fee of £99 applies.
If a Credit Re-assessment is carried out and we find we can lend you more, you can then borrow at our Buy to Let additional borrowing rates available at the time (subject to lending criteria). The minimum borrowing amount is £1,000 and an admin fee applies each time you borrow more. Remember, borrowing more will increase your monthly payments, interest payable and the remaining balance secured on your property.
Can I move my Freestyle Buy To Let mortgage to a different property?
This depends on the type of Freestyle Buy to Let mortgage you have. When you start to think about changing your property, give us a call and we'll discuss your options.
Fixed rate buy to let mortgages are fully portable and can move with you if you change property. Any additional funding you need, you can choose from our current product range available at that time.
Discounted rate buy to let mortgages are not portable. Customers who change property can either take out another discounted rate buy to let mortgage or switch to a fixed rate buy to let mortgage.
A Redemption Discharge Fee plus any early repayment charges will apply. However, as long as you complete your new Freestyle Buy to Let mortgage within 90 days of redeeming your original one, these charges will be refunded.
Expand your portfolio with half price fees for multiple mortgages
For additional properties you will only be charged half price arrangement/booking fees on a maximum of 9 further Buy to Let mortgages within the 12 month period following Approval In Principle (AIP) stage of your first application.
To get a quote for these products simply go to the Buy to Let quick quote calculator and select to see the reduced fee products.
Your next step
How do I apply?
You can apply online in 3 simple steps: Your first step is to get a quick quote, then request an illustration and, finally, complete our online application form
Alternatively, you can call us direct on 0845 606 6710 (Monday to Friday: 8am-6pm).
