Buy-to-let mortgages are designed for landlords who wish to buy property to rent out rather than to live in themselves. Traditionally, buy-to-let mortgages are more expensive than other mortgage types, but they can help new landlords to become property investors and potentially reap rewards over time.
Conditions of buy-to-let mortgages:
Buy-to-let mortgages are usually more expensive than standard tracker or fixed-rate mortgages, and prospective landlords will usually need a deposit of at least 25% of the value of the property. How much can you borrow? Try our calculator.
Lenders will sometimes expect buy-to-let mortgage applicants to own a property already, either outright or with an existing mortgage.
Borrowing Linked to Rental Income
The amount a new landlord can borrow is likely to be linked to the value of the rent he/she plans to charge. Lenders prefer a margin of at least a quarter between the rent level and the mortgage payment. How much will you need to charge in rent? Try our calculator.
How do you determine the best buy-to-let mortgage?
The best buy-to-let mortgage deal will depend on your individual circumstances. The value of the property will have to be weighted against realistic rental income prospects for the area and the affordability of the mortgage.
The rate for your buy-to-let mortgage will depend on the property value, your deposit, and potential rental income.
Landlord mortgages are also available as fixed-rate and tracker mortgages, which have their own distinct advantages and disadvantages. Check out the fixed-rate mortgage and tracker mortgage pages for more information.
Is a buy-to-let mortgage the right option?
There are complications to becoming a private landlord. Your income is not guaranteed, while some of your rental income will be lost to property maintenance and letting agents’ fees.
Landlord insurance is likely to be more costly, because you are not a permanent resident at that property, while legal insurance is an extra premium if you need cover for the legal costs of eviction.
But the market conditions are currently very favourable for buy-to-let property. The Funding for Lending Scheme has made borrowing cheaper, while the large numbers still saving for deposits ensure there is strong demand for private rental property.
Compare your best buy-to-let mortgage options above.
As always, we recommend that you seek professional advice if you are unsure which type of mortgage is right for you. All of the information provided above is for use as an overview only and should not be the basis for your mortgage decision.