What is a Buy-To-Let Mortgage?

If you are looking to buy a property to rent out, you will be known as a landlord and require a Buy-To-Let (BTL) mortgage. The rules are similar to residential mortgages but there are some key differences.

  • The fees generally tend to be higher.
  • Interest rates are usually higher.
  • The minimum deposit is typically 25% of the property’s value, although this can change between lender.
Interest Only?

Most BTL mortgages are usually interest-only. This means you only pay the interest element of the mortgage each month and not the capital amount. At the end of the mortgage term, you repay the original loan in full.

If you prefer however, you can chose to get a BTL mortgage on a repayment basis.

Are BTL mortgages regulated?

The majority of BTL mortgage lending is not regulated by the Financial Conduct Authority (FCA) unless you are looking to let the property to a close family member. In this case the mortgage is referred to as consumer buy-to-let mortgage and assessed according to the same strict affordability rules as a residential mortgage.

How much could I borrow on a Buy-To-Let Mortgage?

Unlike a residential mortgage, where the amount you can borrow is based on your salary and your outgoings, a buy to let mortgage is assessed on the rental income that the property is likely to generate. Lenders will typically need the rental income to be at least 125% or 145% of the monthly mortgage payments, depending on your tax bracket (on an interest only basis).

Buy-To-Let for first time buyers

If you want to buy a property to let as your first property, this is possible but there may be some limitations. A large percentage of lenders need you to own your own residential property (possibly for at least six months) before they will offer you a buy to let mortgage. Some lenders just need you to own a property, so you could have another buy to let property but live in rented accommodation.

Frequently Asked Questions

FAQs

We’ve collated a listed of common questions and answers asked by Buy-To-Let mortgage seekers, for your convenience.

  • How much deposit do I need?

  • How much can I borrow?

  • What schemes are available for Buy-To-Let mortgages?

  • How can I boost the chance of getting a mortgage?

  • Does my credit score affect my mortgage rate?

  • What is a house in multiple occupation (HMO)?

  • What is a “Mortgage agreement in principle”?

  • Can first time buyers get a Buy-To-Let mortgage?

  • What paperwork will I need to apply for a mortgage?

Buy-To-Let FAQs
Expert Advice

What We Do

Yorkshire Rose Mortgages can help you get the best mortgages deals that meet your needs.

  • We review your financial situation and understand your personal circumstances.

  • We research the market and collate the best deals that meet your needs.

  • We save you time, money and reduce the stress of securing a mortgage.

  • Because we are not tied to one lender, we’re able to offer more flexibility and choice.

  • We take care of the application process for you.

  • We’re here for you even after you receive your keys and can help with mortgage protection.

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Your property may be repossessed if you do not keep up repayments on your mortgage.