If you want to buy a property to let to tenants, one way of funding it is a 'Buy to Let' mortgage.
How a Buy to Let mortgage works
With a specially designed 'Buy to Let' mortgage, lenders will be able to take into account the rental income you will earn in calculating the amount you can borrow - either basing their loan entirely on potential rental income, or adding it to your income from your job. The exact calculations applied vary from lender to lender but, generally speaking, lenders would expect the rental income to be between 115% and 125% of the mortgage payment. If you have a mortgage on your own home, the amount you can borrow may be reduced to take its cost into account. Lenders may also set limits on the number of Buy to Let mortgages you can hold at one time, or on the overall maximum borrowing.
Buy to Let mortgages - what's on offer
Lenders no longer apply commercial rates to Buy to Let mortgages, and increased competition means that products and interest rates are now more attractive, with a choice of discounted and fixed rates available. However, Buy to Let rates are still generally slightly more expensive than owner-occupier mortgages.
Points to note
Owning an investment property has significant implications, so we recommend you seek professional advice before investing and bear in mind the following:
- Ensure you research any prospective property thoroughly, seeking advice from local estate and letting agents about whether it is suitable for letting, the potential rental income, and the current level of demand.
- Bear in mind the hidden costs involved - stamp duty, solicitors fees, letting agency and management fees, ongoing maintenance and repair costs, any ground rent or service charges for leasehold properties, and the cost of buildings insurance where the property is let out.
- Consider the implications of a rise in interest rates, and make provision to ensure that you can always make your mortgage repayments even if you receive no rent.
- Bear in mind the tax implications, and consider taking professional tax advice.
- Remember that the value of property can go down as well as up, and buying to let needs to be viewed as a medium- to long-term investment opportunity.
Mortgage Dimensions makes finding the right Buy to Let mortgage easy for you...With access to specially designed Buy to Let products from most of the UK banks and building societies, including some exclusive deals not available on the high street, it makes sense to take advantage of our expertise and inside knowledge of the mortgage market. Not only can we recommend those most appropriate Buy to Let for your needs, but we'll look after your application throughout the whole process, from beginning to end, ensuring that everything goes smoothly, with the minimum of fuss and no delay....and there's no fee for out service!
Enquire online or call to talk to us on
0845 021 0212
Buy to Let mortgages are not regulated by the Financial Services Authority.
YOUR BUY TO LET PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
Find out more about buying to let at the Association of Residential Letting Agents' website - www.arla.co.uk.
