Beginners Guide to Getting a Buy-to-Let Mortgage
Property investment can be a great way to make some easy income - but before you become a landlord, you'll need a buy-to-let mortgage in order to purchase your rental property...
What is a buy-to-let mortgage?
Simply put, these are mortgages which are specifically designed for people who want to buy property in order to rent it out. They are slightly different to a standard mortgage that you'd get to buy a home.
You'll usually be expected to pay a higher deposit of around 25% - and this might be as high as around 40% for the best deals. This type of mortgage also tends to be more expensive than a standard version.
Most buy-to-let mortgages are interest only, which means you don't have a monthly repayment. Instead, at the end of the mortgage term, you repay the original loan in full.
Is it illegal to rent a house without a buy-to-let mortgage?
If you can pay for the property outright and don't need a mortgage then there's no problem. However, if you do need a mortgage in order to pay for your rental property then you must be upfront about why you're purchasing the property when it comes to getting a mortgage.
What are the criteria for a buy-to-let mortgage?
As with any mortgage, the requirements will vary from product to product and from lender to lender. However, here are the main criteria that most companies will consider:
- Do you already own a residential home?
- Affordability - your expected monthly rental income should be at least 125% of the monthly interest payments on your mortgage
- Property usage
- Credit history
- Whether you're based in the UK
Of course, there are always exceptions and it's a good idea to speak to a Mortgage Broker who will be able to help you find the best deal for your specific circumstances.
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We'd love to help you find the right buy-to-let mortgage! To chat to one of our friendly advisers, book your free consultation today...
How much can I borrow for a buy-to-let mortgage?
The amount you can borrow will also depend on the lender, the product and your personal circumstances, as listed above. However, your borrowing limit will largely be determined by the amount of rental income you expect to get.
Lenders normally need the rental income to be 25–30% higher than your mortgage payment.
We'd love to help!
Here at BB, we've helped hundreds of landlords find their perfect buy-to-let mortgage and we'd love to help you too! To speak with one of our expert advisers, book your free consultation today.