Buy to let mortgages

UK Landlord's Mortgage

It was a lot harder in the past to own more than one property. It is generally against the rules to buy a property and rent it out on most conventional mortgages. However, since demand has outstripped supply in the past, it is now easier to own more than one property by taking out a buy to let mortgage. In fact it is not necessary to go to a specialist lender as in the past.

Most mainstream lenders can offer a BTL mortgage and offer a range of products as varied as those for standard mortgages. Lenders consider a BTL mortgage to be of a higher risk value than standard residential mortgage because it is the tenant that will be paying it off and not the person who applies for the mortgage.

The mortgage itself is structured in the same way as residential mortgages. You will need to put down a deposit and choose the type of rate you pay. The main difference is that most lenders will calculate how much they are going to lend you based on the property's rental income, rather than on your income. Although some lenders will still require proof of income, the requirement for this is not always necessary.

The achievable rent needs to be between 100% and 150% of the mortgage repayments. This means that if your monthly repayments to the lender is £1,000 you should be able to prove to the lender that you will receive a rental income of £1,000 to £1,500.

In general you would be able to borrow you to a maximum of 90% of the purchase price, with better rates with an 80% loan.

There are tax implications with this type of mortgage as you will be earning a profit from the property. It is advisable to employ an accountant or financial advisor to help you through the procedures.

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