Buy to let mortgage is a type of mortgage for individuals that are specifically for owned or purchased properties with the intention to rent them out to tenants, as opposed to living in them, and receive rental income each month from the tenant.
Buy to let mortgages are usually set up as interest-only mortgages, this is where the monthly interest payments are used to service the mortgage (or also known as capital) borrowed across the mortgage term. And you pay off the full capital at the end of the mortgage term via a suitable repayment vehicle, usually the sale of the property.
Most Buy-to-Let mortgages are not regulated by the Financial Conduct Authority.
When applying for a buy to let mortgage, you will usually need a larger deposit than for a residential mortgage. These types of mortgages have higher interest rates and require a minimum 15% – 25% deposit depending on the availability of the range of buy to let products.
The higher the deposit you place the more attractive the interest rates would be, as less risk is taken up by the lender.
The mortgage amount you can borrow will depend on how much rent you can expect to achieve on your chosen investment property.
Typically, lenders will want the expected rental income to meet at least 25% – 45% above your monthly repayments. This is to cover the cost of the mortgage payments and property expenses, such as building insurance, repairs, and letting agent management fees.
If the monthly rent does not self-finance the mortgage amount you need, then either this extra deposit can be used or some lenders may consider using disposable income i.e., top-slicing, to maximise your borrowing amount.
Some lenders may require you have a minimum annual salary, usually of £15,000 – £25,000. Saying this, some lenders have no minimum income requirements, as long as you have some form of income to meet rental voids and future repairs, or the monthly rent can self-finance the mortgage amount you are borrowing.
The minimum and maximum ages differ from lender to lender. Some will take on individuals as young as 18 years old, while others will accept those as old as 85 years old at the application stage. And some lenders do not even have a maximum age limit.
For a buy to let mortgage, various lenders cater to different borrower statuses such as; first time buyers, first time landlords, experienced/ professional landlords, or even portfolio landlords. There are very few lenders that will accept first time buyers who are looking to acquire their first property and become first time landlords. And not all lenders will accommodate large portfolios either.
Individual’s credit history can vary a lot, it is for this reason there is a spectrum of buy to let mortgage lenders that can help. It can be difficult to obtain a mortgage with a poor credit history but saying this there are specialist lenders more flexible than others that can assist but will charge higher interest rates to compensate for the additional risk.
Buy to let mortgage products usually have more fees associated as follows:
TAX TREATMENT DEPENDS ON INDIVIDUAL CIRCUMSTANCES AND IS SUBJECT TO CHANGE.
Triton Private Finance knows how complicated buy to let mortgages can be. It is our main objective to ensure our brokers provide a hassle-free process to find the right bespoke solution and suitable product for you. We have assisted a range of clients from first time buyers & first time landlords to large portfolio landlords, to be able to raise finance, restructure and grow our client’s property portfolios.
It can be time-consuming and tricky to source the right buy to let mortgage product. It is, for this reason, we have taken the time to know the various lending and eligibility criteria across many lenders, to ensure we fully evaluate your current and future needs & circumstances, and to tailor the right advice accordingly.
Our brokers will ensure you understand how these types of mortgages work and take care of the full process from initial consultation until the completion of your property financing journey.
We take pride in customer service for each of our clients, to ensure you are kept in the loop every step of the way.
Triton Private Finance Limited is registered in England and Wales with the company number 13548123. Registered Address: 128 City Road, London, EC1V 2NX.
Triton Private Finance Limited is an Appointed Representative of PRIMIS Mortgage Network which is a trading name of Personal Touch Financial Services Limited. Personal Touch Financial Services Limited is authorised and regulated by the Financial Conduct Authority.
The guidance and/or advice contained in this website is subject to the UK regulatory regime and is therefore restricted to consumers based in the UK. The Financial Conduct Authority does not regulate some forms of buy to let mortgages.
This firm usually charges a fee for mortgage advice. The amount of the fee will depend upon your circumstances and will be discussed and agreed with you at the earliest opportunity.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
Try our mortgage repayment/ overpayment calculator, or check out how to review your credit report.
