When someone buys an investment property, using a buy-to-let mortgage may be their go-to method of paying for the investment.
Buying off-plan UK property with a buy-to-let mortgage is certainly possible, but there may be more obstacles for investors to cross to secure a mortgage offer.
When it comes to getting a mortgage for off-plan property, you will approach this as you would with a completed property purchase.
Speak to a mortgage advisor who will be able to connect you with mortgage brokers, and be sure to mention that you’re looking to buy off-plan property so that they can offer mortgage brokers that specialise in this field.
Some of the issues you could run into when you want to find a mortgage offer for an off-plan property include:
- Many mortgages are valid for only six months. If your off-plan property takes longer than this to complete, you could need to reapply for a mortgage.
- You could struggle to find a mortgage lender who specialises in or offers off-plan buy-to-let mortgages.
There are, however, some ways you could try and get around this.
Get a clear picture of how long your property will take until it’s completed by finding out its expected completion date.
This way, you can prepare your mortgage lender by letting them know when your property will likely be completed.
Another option for financing your off-plan property investment is to pay with a payment plan.
Many off-plan developers and property companies offer payment plans and allow investors to split the cost of an off-plan property into smaller, more manageable chunks.
This means that instead of buying a property with an off-plan mortgage, those who don’t have the entire property amount right away won’t need to pay everything until the property is completed.
Here’s an example of the payment structure for one of the off-plan properties sold at RWinvest.
- Reservation fee of £5,000 to reserve your unit.
- 35% of the property price upon exchange of contracts.
- 15% of the property price by a set date during construction.
- 50% upon completion (minus reservation deposit).
Depending on the length of time between reservation to completion, this option potentially leaves investors a lot of time to gather the funds to pay for their property in full.
The added benefit of paying for your off-plan investment with a payment plan is that you don’t have to worry about any buy-to-let mortgage repayments.