buy to let mortgage guides
If you can’t purchase your investment property outright then you’ll need to apply for a mortgage. However, this will need to be a Buy to Let mortgage. A standard or residential mortgage is only suitable when you plan to live in the property.
There are differences between Residential and Buy to Let Mortgages. The main difference is the way affordability is calculated. Sometimes lenders can take your personal income into account, but usually this is secondary. There are a number of different factors to take in to account when you’re looking for that perfect mortgage; our guides can help and we’re always available for one to one advice.
When choosing a mortgage, you’ll need to consider different mortgage interest rates and fees you’ll be charged.
There are two main types of mortgage rate, there are Fixed Rates, where the interest you’re charged remains the same for several years, usually between two and five years. And there’s variable rates, where the amount you’re charged can go up and down.
The first, and probably most obvious time, is the end date of your existing mortgage deal. This is an ideal time to switch products. By not remortgaging at the end of your current rate term, it’s likely you’ll end up on your lender’s Standard Variable Rate. Probably meaning your repayments will go up.
During the fixed rate period your payments will remain the same. Whatever happens to interest rates during this time, whether they go up or down, your payments will not change. This can be a great help when it comes to budgeting. It also provides valuable peace of mind, that you won’t suddenly see your payments increase if interest rates go up.
what is a buy to let mortgage
What is a buy-to-let mortgage?
BTL mortgages are used when you’re looking to buy and rent out your property, rather than when you’re buying somewhere you want to live.
Who are buy-to-let mortgages for?
Not everyone can get a BTL mortgage. Mortgage providers will almost always have certain requirements and not everyone will qualify. That said, requirements vary considerably and, as a result, it’s always worth a call to check out your position. BTL mortgages tend to be more expensive. They also require bigger deposits.
How does a buy-to-let mortgage work?
BTL mortgages are normally set up as interest only. As a result, the amount you owe doesn’t reduce. Rent from your property is generally used to pay your monthly interest. The amount you borrow needs to be repaid at the end of your mortgage, usually this is achieved by sale of your investment property.
Are buy to let mortgages interest-only?
Most BTL borrowers prefer to take out an interest only mortgage, chiefly because these have lower monthly repayments. Repayment mortgages are also available, and as a result they are becoming a popular alternative, even though repayments may be more.
How much can you borrow
How much you can borrow typically depends on the amount of deposit you have available, your personal circumstances and the amount of rental income being received.
Are buy-to-let mortgages more expensive?
Buy to Let mortgage carry a greater risk, as they’re not secured on the property you live in and rent payments can’t be guaranteed. As a consequence of this BTL mortgages can cost more. Both higher interest rates and larger deposits are normal.