Buy-to-Let Mortgage
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Buy-to-Let Mortgage
A buy-to-let mortgage is for use by prospective landlords wishing to purchase property to rent out to others, rather than as a residence.
Key differences between buy-to-let and residential mortgages are: rather than assessing the amount which can be borrowed solely on personal income, lenders instead consider the level of rent expected to be received from tenants. Typically, a lender will require annual rent to be 125% of the mortgage repayments.
Fees and interest rates for buy to let are usually higher than regular mortgage products.
Both interest-only and repayment buy-to-let mortgages are available, but most landlords tend to choose an interest-only product due to the lower monthly payments.
To take out a buy-to-let loan, the majority of lenders will require to see a good credit record and income, as you will usually be taking on the responsibility of a second mortgage. Almost all lenders will not consider first-time buyers for a buy-to-let loan.
Questions about Buy-to-Let Mortgages?
Here are some commonly asked buy-to-let questions
Do I need an income for a buy-to-let mortgage?
Buy-to-Let mortgages are assessed on the rental income that the property is likely to generate, unlike a residential mortgage, where the amount you can borrow is based on the borrower’s salary and outgoings. That said most lenders will also require the borrower to be earning an income separately themselves.
How much of a deposit do I need for a buy-to-let mortgage? Â
There would be an expectation/requirement by most lenders of at least a 20-25% deposit being required. The bigger the deposit percentage which a prospective borrower can put down, the cheaper buy-to-let rate deals could be, i.e. at circa 40% deposit.
THINGS TO NOTE
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