Whether you’re purchasing your first buy-to-let property or your 20th, our expert financial guidance will help you find the best deal on your buy-to-let mortgage.
What is a Buy-To-Let?
Buy-to-let (BTL) mortgages are designed for individuals looking to purchase residential property for the purpose of renting it out to tenants. While BTL mortgages share similarities with standard residential mortgages, there are notable distinctions between the two.
What are the differences between BTL & standard residential mortgages?
Affordability
When determining whether to approve a mortgage, lenders will consider the rental income expected to be generated from the property. Unlike with a regular residential mortgage, lenders typically rely on the property's rental income, rather than the borrower's salary, as the main source of income for repaying the loan.
Deposit
Just like ordinary mortgages, generally the bigger the deposit the better the deal you’ll be offered, so ideally you should put down as big as a deposit as you can. Those who can provide a significantly higher deposit typically qualify for more competitive interest rates.
Interest rate
Buy-to-let mortgages pose a higher risk for lenders compared to standard residential mortgages, which is why borrowers in the buy-to-let sector often face higher interest rates.
Mortgage Repayment
The products offered to buy-to-let borrowers by lenders are typically similar to those available to standard residential mortgage borrowers, such as tracker, fixed rate and variable rate mortgages( depending on the lender). However, since most buy-to-let borrowers purchase properties for investment purposes, certain mortgage options may be more suitable than others.
Many BTL buyers have a preference for interest only mortgages as opposed to a capital and interest repayment mortgage. This means that you can buy the house, make money on the rent for the payment term and then pay off the mortgage by selling the house at the end.
