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Buy to Let Mortgages

We are experts in Buy to Let mortgages, our advisors have a wealth of experience with both individual, limited company Buy to Let, portfolio landlords as well as complex incomes. Read on to find out more about Buy to Let mortgages.

Mortgages for property investment

If you want to purchase an investment property in the UK then you may require a mortgage to do so. Mortgages for purchasing investments aren’t the same as residential mortgages and these differences can be seen in the way these mortgages are organised, calculated and even regulated.

There are a few different types of mortgages for investment properties. The type of investment mortgage you need will depend on your circumstances and the type of investor you want to be.

The different types of investor

Accidental Landlords

An accidental landlord is someone who didn’t intend to become a landlord at all. Surprisingly this happens more often than you’d think. If you have inherited a property or found one to buy without having time to sell your own, you’re an accidental landlord.

Holiday Let Landlords

As Holiday Lets produce irregular and usually seasonal income you would need a specific type of mortgage in order to purchase one. Not all lenders will entertain this type of mortgage but we know all of the best places to look for the best Holiday Let mortgages.

Professional Landlords

If you’re building up a portfolio of investments or own a limited Buy to Let or management company then you’ll be classed as a professional landlord. You’ll want to understand how you can maximise your returns and work only with lenders who suit your business goals.

Novice Landlords

You could be a First Time Landlord or even a First Time Buyer, First Time Landlord. You’ll want to learn all about property investments and the mortgages you need to get started. Most are keen to avoid rookie mistakes and this can be helped by speaking to experts such as ourselves.

Types of investment mortgage

Their are a few types of mortgage which are typical for investment purposes, which one you need will depend on which type of landlord you intend on being, or in the case of an accidental landlord, find yourself being.

Buy to Let

A Buy to Let mortgage is a mortgage taken out specifically for the reason of renting a property. Most buy to let mortgages will be taken on an interest only basis. Typically Buy to Let mortgages will be calculated against the rental income for the property, and not the applicants income. However, with all types of mortgage, each lender will assess and calculate affordability differently.

Holiday Let

As holiday lets generate income differently from traditional buy to lets, lenders assess the affordability differently. This means that for a Holiday Let you will need to apply for a specific Holiday Let mortgage product.

Let to Buy

A Let to Buy mortgage is necessary when you wish you rent out your current residential home and withdraw some of your equity in order to purchase a new residential property. This process involves two mortgages, one for your existing property which will be converted to a Buy to Let mortgage and another for your onward purchase which will be a residential mortgage.

Let to buy is a scenario rather than an actual mortgage product. It’s where you remortgage your existing home onto a buy-to-let basis, often releasing additional equity from it at the same time which you can then use as a deposit on a new home.

How the Buy to Let remortgage works

You remortgage your existing property onto a buy-to-let basis so that you’ll be able to rent it out. It’s common to release additional equity from your property by remortgaging for an amount greater than your current outstanding mortgage balance. You can then use this money – along with any savings – as a deposit on your new home.

How the residential mortgage works

The residential mortgage on the new property is relatively straightforward. The lender assesses your income to work out how much you can borrow. The main difference is that they also must consider how your buy-to-let remortgage will affect your expenditure when calculating what you can afford.

Nonetheless, since the buy-to-let remortgage should be covered by the proposed rental income, it will almost certainly be excluded by the lender in the underwriting process for the residential mortgage application.

Learn about Buy to Let mortgages

What is a BTL
What is a Buy to Let

It is a property bought specifically to be rented out to tenants, rather than being lived in by the purchaser.

It is a property bought specifically to be rented out to tenants, rather than being lived in by the purchaser.

Investors can generate an income both via the rent charged and by making a capital gain when they come the sell the property. To generate this monthly income, the rent charged must be higher than the monthly mortgage repayments. They carry risks like all investments:

– Rising Interest Rates

– Difficult Tenants

– Unable to sell if the market changes

It is a property bought specifically to be rented out to tenants, rather than being lived in by the purchaser.

WHAT IS A BTLM
What is a Buy to Let Mortgage?

Buy to Let mortgages are different to residential mortgages. One of the main ones is how your affordability is calculated. We will help you work out exactly how much you could borrow on a Buy to Let mortgage.

If you can’t buy your investment property outright, you’ll need to apply for a mortgage. But this will have to be a specific buy-to-let mortgage. A standard or ‘residential’ loan is only relevant when you also plan to live in the property.

Buy to Let mortgages are different to residential mortgages. One of the main ones is how your affordability is calculated.

FINANCES WORK
How do the finances work?

Investors can generate an income both via the rent charged and by making a capital gain when they come the sell the property.

Investors can generate an income both via the rent charged and by making a capital gain when they come the sell the property. To generate this monthly income, the rent charged must be higher than the monthly mortgage repayments. They carry risks like all investments.
Before looking at properties, you need to save for a deposit.
Generally, you need to try to save at least 5% to 20% of the cost of the home you would like.
For example, if you want to buy a home costing £150,000, you’ll need to save at least £7,500 (5%).
You will be notified well ahead of your renewal date and be invited to move to a new product to help keep your repayments as low as possible.

Affordability
How is mortgage affordability calculated?

Instead of your salary, the lender will view the potential ‘rental income’ of the property as your primary income source. Many lenders will then take your personal income into account as a secondary factor.

Instead of your salary, the lender will view the potential ‘rental income’ of the property as your primary income source. Many lenders will then take your personal income into account as a secondary factor.
The financial leeway factored into rental cover calculations accounts for non-rental payments and ‘void’ periods when the property is without tenants. It reassures the lender you will still be able to meet your mortgage commitment.
A deposit on a buy-to-let mortgage also tends to be bigger than the one required for a standard loan. Most buy-to-let lenders expect a deposit of at least 25% and the very cheapest deals usually require 40% or more.

Lets get started
Let’s find you the right mortgage

We are experts in Buy to Let mortgages, our advisors have a wealth of experience with both individuals, Ltd company Buy to Let, portfolio landlords as well as complex incomes.

Regardless of the complexity of your situation and circumstances we can explore potential financing routes available for your situation.

We are experts in Buy to Let mortgages, our advisors have a wealth of experience with both individuals, Ltd company Buy to Let, portfolio landlords as well as complex incomes.

Regardless of the complexity of your situation and circumstances we can explore potential financing routes available for your situation. Our experts can search through all of the products available to you and advise you on what Buy to Let mortgage deals are right for you.

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