Buy To Let Mortgages
Buy-to-let mortgages are specifically designed for people who want to buy a property to rent out. Buy-to-let mortgages are usually more expensive than normal mortgages, but they could help you become a property investor. If you don’t own your own home outright, or with a mortgage, finding a buy-to-let mortgage will be hard.
Buy-to-let mortgages are generally arranged to either provide the borrower with an immediate income, or to act as a longer term investment. Accordingly landlords may prefer to keep monthly payments as low as possible by arranging an interest only mortgage. Or they may prefer to maximise equity for the future by arranging a repayment mortgage and reducing the debt over the years.
Recent changes to the ability to offset mortgage interest has meant some borrowers may prefer to arrange their portfolio into a limited company.
When landlords have 4 or more properties in their portfolio, they will be classed as a professional landlord and subject to more stringent checks when applying for a buy to let. This can sometimes mean arranging a mortgage is more difficult with certain lenders.
The other key points to consider include:
- Interest rates tend to be slightly higher
- The minimum deposit for a buy-to-let mortgage is usually a quarter (25%) of the property’s value, although some lenders now offer smaller deposit options at 15%
- Interest only is widely available with the sale of the property as the repayment vehicle
- First time buyers are accepted by some banks
- Some lenders require a minimum income from the applicant
If you would like further advice and guidance regarding buy-to-let mortgages, please call one of our team who will be able to help you.
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The Financial Conduct Authority does not regulate some aspects of commercial and buy to let mortgages.
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