Could I leverage my bonus for buy-to-let?

Rents have surged to their highest ever level in the UK, after a 10% increase in the 12 months up to September 2023*. This means there could be opportunities for buy-to-let investors at a time when average property prices have fallen by 5.3%.

It may be possible to use your bonus to secure a buy-to-let mortgage. Here, Zoe Ross, a Private Banker at Investec, explains more.

Can I use my bonus in buy-to-let affordability calculations?

Zoe: When deciding how much to lend you, most mainstream mortgage providers will consider the value of the property, the expected rental income and some aspects of your financial situation, such as your salary. They may not consider non-salaried income such as bonuses.

Through our personal relationships with the investment banking professionals we work with, we have a thorough understanding of the different elements your income might consist of, including bonuses and foreign currency. This means we may be able to offer you a higher LTV than you expect for a buy-to-let property or second home.

What type of buy-to-let mortgages do you offer?

Zoe: Buy-to-let mortgages are typically interest-only. To reflect your unique earning structure, we may be able to incorporate the flexibility to make overpayments from your future liquidity events, such as bonuses, into your repayment plan.

Can Investec lend to a Special Purpose Vehicle (SPV)?

Zoe: To offset costs and maximise returns at a time of high UK base rates, we’re seeing some clients look to purchase property as a limited company.

While lending to a SPV structure can be a challenging proposition for some lenders, our team has specialist knowledge of the tax and legal restrictions and can work with ultimate beneficial owners. We recently provided a mortgage for two buy-to-lets held within a SPV portfolio to an investment banker who owned several properties in London. He wanted to re-mortgage the two properties to raise liquidity to pursue other investment opportunities. While this case was particularly complex as one of the properties was being converted from a single dwelling to three self-contained flats, we were able to provide a £2.4m mortgage.

What else should I consider?

Zoe: When there is a deadline to secure a property, efficient private banking could help. We typically work with investment banking professionals who have an annual income in excess of £300,000. Our understanding of your needs enables us to make decisions and provide mortgages quickly so you can seize opportunities.

Outside of mortgage costs, stamp duty and capital gains tax are applied on buy-to-let properties, and this means you could incur additional fees. Therefore, expert advice is always recommended.

Important information:

Your property may be repossessed if you do not keep up repayments on your mortgage. Investec residential mortgages are only available for residential properties in England or Wales and are primarily available to UK residents and subject to eligibility.