A buy to let mortgage is designed for those who want to buy property to rent out to a third party. As with a residential mortgage you can choose between fixed, discount, and other mortgage types, however the key difference is working out how much you can borrow.
Buy to let mortgage lenders usually base their decisions on the likely rental income from the property instead of the applicant's annual income. Here are some good points to note when looking into a buy to let mortgage:
Loan-to-value (LTV) is generally 60%-85% for buy to let mortgages.
Your rental income will generally need to be around 125% of the monthly mortgage payments.
You can expect a buy to let mortgage to be approximately 1%-2% more than a residential mortgage.
Many landlords prefer a buy to let interest only mortgage. The lender will normally base affordability on the rental income which will generally need to be 125% more than the monthly payments.
If you are planning to create a lettings portfolio – some lenders will place a cap on the number of properties it will mortgage.
Use our buy to let calculator to work out the required rental income that may be needed from your proposed buy to let property.
This calculator provides a guide to the rental income likely to be required from a lender to support the mortgage applied for and does not guarantee eligibility for the mortgage. Please contact us for a personalised Mortgage Illustration.
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
This firm usually charges a fee for mortgage advice. The amount of the fee will depend upon your circumstances and will be discussed and agreed with you at the earliest opportunity.