BUY TO LET MORTGAGES

For rental property

BUY TO LET MORTGAGES

For rental property

What Are Buy-to-Let Mortgages?

Buy-to-let mortgages are used by an individual to purchase a home that they will own, but not live in. Instead, they’ll rent it out to other people, and collect an income from the rent.

Who Are Buy-to-Let Mortgages For?

Buy-to-let mortgages are for people who want to become landlords, yet who don’t have the capital to buy a property outright. Instead, they approach mortgage advisers, and get the money in the form of a loan, which they’ll pay back with rental income.

How Much Can You Borrow?

You’ll need to use a buy-to-let mortgage calculator to figure out how much you’ll be able to borrow. The amount will depend on various factors. The biggest factor will lay in how much rent you’re able to collect. The higher the rent, the bigger the loan you’ll be able to receive.

Generally speaking, mortgage lenders ask that the rental income amounts to 125% (sometimes 140% or higher) the cost of the mortgage repayment. There can be an added risk with this type of deal (as opposed to a traditional residential mortgage) because there are no guarantees that the property will always have tenants. As such, homes in areas where there’s a steady demand for rental homes will fare well.

How Many Buy-to-Let Mortgages Can You Have?

Most people who want to become landlords don’t just have their eye on one property; they want multiple. Many mortgage lenders allow their customers to have between three to five mortgages with them or set it at an amount (say, one million pounds worth of loans). If you’re thinking about adding another property to your portfolio, then speak with your lender. There’s usually something that can be arranged. It’s worth keeping in mind that some lenders don’t allow mortgages with other lenders, too.

Are There Any Conditions?

Yes, there are. There are two big things to keep in mind if you’re going down this route. The second is that the property you buy must be ready to live in as soon as you own the keys. It’s not possible to get a buy to let mortgage on a “fixer-upper.” Some mortgage lenders also set an upper age for applicants.

How Can You Get the Best Rate?

You’ll get the best buy to let mortgage rates if you can show there’s demand for rental properties, and that you’ll be able to charge more than the amount of your repayments (as with most things mortgage-related, the more, the better). You’ll also get a better deal if you have a deposit that’s in the 20-25% range. As with all mortgage applications, your individual financial situation and background will also be important too. The higher your salary and more robust your credit score, the better you’ll look in the eyes of mortgage lenders.

Buy-to-let mortgages are something that we do here at Active Mortgage, and we would happily chat to you in regards to your needs. Please do feel free to call us on 01245 850165 or contact us here, and we will be in touch as soon as possible.

These articles are for information only and no advice should be conferred from the content within. Please seek independent financial advice prior to taking any action.

As a mortgage is secured against your property it may be repossessed if you do not keep up the mortgage repayments.

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IMPORTANT INFO

Think carefully before securing other debts against your home. Your mortgage is secured on your home, which you could lose if you do not keep up your mortgage repayments.

We will charge a fee for mortgage advice between £250.00 and £2000.00. The amount we charge is dependent on the amount of research and administration that is required. Please refer to the Customer Terms of Business for further information.

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YOUR HOME OR PROPERTY IS AT RISK IF YOU ARE UNABLE TO MAINTAIN PAYMENTS ON ANY MORTGAGE OR LOAN SECURED AGAINST IT.

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