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A buy to-let mortgage is a type of mortgage specifically used to buy an investment property to be rented out to tenants.
Buy to-let mortgages are usually offered on an interest-only basis, which means cheaper monthly payments, but remember you’ll have to pay the mortgage off in full at the end of the term. Most people sell the property to do this.
As well as looking at the value of the property, when deciding on how much you can borrow, lenders will also consider how much rental income you can expect to receive. They’ll want your rental income to be at a minimum 125% of the monthly mortgage payments.
You’ll need a bigger deposit to get a buy to-let mortgage – usually between 25% and 40%.
Buy-to-let FAQs
A buy-to-let mortgage is type of mortgage when someone buys a property, solely as an investment. The property is then rented out, rather than lived in by the person buying the property.
Buy-to-let mortgages are for anyone, whether you’re a new landlord or an expert investor. In most circumstances, you’ll need a larger deposit for a buy-to-let mortgage, typically over 25%.
Buy-to-let mortgages are very similar to normal mortgages. The only thing that differs is that buy-to-let mortgages are often interest only. This means you only pay the interest, and you can pay off the balance of the property when you decide to sell it.
The amount you can borrow depends on the value of the property and the rental income you’re expecting to receive. Lenders will usually ask that the expected rental income is at least 125% of your monthly interest payments. If your payments are around £400 a month, they’d expect you to charge around £500 a month rent.
No. Buy to Let mortgages are specifically for properties that will be rented out. If you want to take out a mortgage for a property you are living in, then you would need a residential mortgage.
That depends on the lender. Most lenders set a limit either in monetary terms (as in, a total amount of borrowing) or in the number of buy to-let mortgages (as in, a maximum number of mortgaged rental properties). When you speak to one of our advisers, they will take any other properties you have into account and search for a suitable lender that matches your circumstances.
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