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If you are a landlord who is looking to grow a property portfolio there is a good chance that you are going to need a buy to let mortgage. Unless you are fortunate enough to purchase an investment property outright, buy to let mortgages are the route to take. Our Buy To Let Mortgage Guide will lead you through every step on the road to becoming a landlord.
As the name suggests, a buy to let (BTL) mortgage is a type of mortgage that allows people to buy a house with the intention of then letting it out. This means that these mortgages are used for people using property as an investment/income producer. They are not used to buy a property that you go on to live in yourself.
When it comes to the amount that you can borrow with a buy to let mortgage, lenders will usually only approve a loan amount if the forecasted rental income exceeds the mortgage payments by a certain percentage, 25-30% is standard.
some lenders also have minimum personal income requirement and won’t approve you for a buy-to-let mortgage unless you’re earning over a certain amount.
Most BTL lenders will ask you to put down a minimum of 20-25% of the property’s value as a mortgage deposit. There are currently 1 or 2 lenders that are known to approve customers with lower deposits of just 15%, under the right circumstances.
Generally speaking, the more deposit you’re able to put down, the better the interest rate you could potentially get. Deals where the lender is taking on a greater risk, due to factors such as bad credit, may call for a higher deposit from the customer.
There are some disadvantages of having a buy to let mortgage and a tenant refusing to pay is one of them.
With a buy to let mortgage, it is your responsibility to meet your repayments regardless of whether or not your tenants are paying their rent on time. That being said, there are insurance products available that can see your mortgage payments being covered for a period of time should you encounter issues.
Its essential that you speak with an expert mortgage broker, like, mainly mortgages when considering a buy to let so we can go through your options thoroughly.
Typically buy-to-let mortgage lenders prefer customers with landlord experience. This will normally mean that you are a lower risk to them and have a track record of running an investment property (BTL) successfully.
There are, however, a smaller number of BTL lenders who specialise in first-time landlords.
Many BTL mortgage lenders won’t lend to anyone who doesn’t have their own residential mortgage. Most will want you to have been a homeowner for 6-12 months, but there are a few lenders that offer buy-to-let mortgages for first-time buyers. These are hard to obtain but not impossible if you have the right mortgage broker.
The most useful step that you can take is to get in touch with us at Mainly Mortgages. We are the experts when it comes to assisting landlords, wether you’re experienced or first time buyers .
A mortgage is a loan secured agains your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
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Subject to circumstances, a fee may be payable. Typically £99 on application & £600 on completion.
If your circumstances or history involves any adverse credit, complex situations or a commercial element then this may increase to a maximum of £2999 with £99 payable upon application. Your adviser will, in all cases, confirm all costs in writing prior to any application being made
