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What is a buy-to-let mortgage?
A Buy-to-Let mortgage is similar in a lot of ways to a standard mortgage in that it is a loan secured on a property. The difference is that it is a product specifically designed for those people who are purchasing a property or properties with the objective of renting them out.
Although Buy to Let mortgages are typically interest only loans, they are available as fixed, variable and discounted rates.
Why do people invest in buy-to-Let properties?
It’s all about the potential returns, with Buy-to-Let properties having the potential of making you money in two ways:
1. Rental Income
A regular income is received in the form of monthly rental from your tenants. The amount of rent that you will receive will be dependent on a number of factors which include your property being tenanted, its size and location.
2. Capital Growth
Whether or not the property you are buying proves to be a good long-term investment will depend on a number of factors which include; the strength of the market (prices can go up and down), the location, the size and condition of your property.
How to get a buy-to-let mortgage
When you apply to take out a buy-to-let mortgage, you will be expected to meet certain criteria.
As lenders will often use the anticipated rental income from your property to determine how much they will lend you, the expected monthly rental income must exceed your buy to let mortgage repayments by a certain percentage.
To qualify for a Buy-to-Let mortgage, you will be expected to put down a deposit of around 25% of the property value.
Although a buy to let property can be a great investment, there are a number of factors that should be considered before getting involved in the buy to let market.
- Property prices go down and you could lose money if the value of the property were to fall.
- You potential income will fall if your experience trouble in finding tenants to occupy your property.
- Fees and interest rates tend to be a little higher than standard mortgages for homeowners.
- Buy-to-lets are treated as investments and they are subject to income tax on the rent received and capital gains tax on any future sale of the property.
- Other costs involved in purchasing a Buy-to-let property include legal fees, valuation fees, broker fees and ongoing property maintenance costs and mortgage repayments.
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The Mortgage Advice Service only recommend appropriate mortgages after we conduct a full review of your personal circumstances Our review service is completely free and there is no commitment for you to action any recommendations that we make.
However if you choose to effect a mortgage through The Mortgage Advice Service, depending on the complexity of your individual circumstances, fees may apply. Should a fee apply, we will explain what you will be charged prior to proceeding with your application. We will charge a fee of between £0 and £325. If a fee is being charged, it is paid on the completion of your mortgage.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
The Mortgage Advice Service can help point you in the right direction, providing you with friendly, professional and confidential advice when you need it most.
How we can help
Having access to a comprehensive range of mortgages from across the market which includes deals and lenders that are not available on the high street, we are confident of being able to find a great deal for you.
- We will provide you with a dedicated mortgage advisor who will be available seven days a week.
- We will search a comprehensive range of mortgages from across the market to find the best deal to suit your particular circumstances.
- We will also complete all of the mortgage paperwork with you and help manage the process where relevant, by liaising with lenders, solicitors and surveyors to make sure everything runs smoothly.
So if you are looking to find a great mortgage deal, our mortgage advisors will help you find the best one available to suit your particular circumstances.