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Buy to Let Mortgages – What You Need to Know
A Buy to Let mortgage (BTL) is a mortgage designed for properties purchased in order to rent to tenants. While Buy to Let mortgages are similar to a regular one, there are some key differences that are critical to understand.
Who Can Get a Buy to Let Mortgage?
There are some stipulations and requirements when it comes to using a Buy To Let mortgage. Obviously, you must purchase or mortgage the property with the intention of renting it to tenants.
You may have to already own your own home and have a good credit record. Your current outstanding debts, for example on credit cards, should not be excessive. You also have to receive enough rental income in a year to cover the expense of owning a rental property, and often a minimum income is required.
How do Buy to Let Mortgages Work?
There are some important differences between a regular mortgage and a Buy To Let mortgage. The fees are usually higher on a Buy To Let mortgage as well as the interest rates and deposit amounts. You may also have to have a minimum income.
Buy To Let mortgage lending is not typically regulated by the Financial Conduct Authority unless you are letting the property to a family member.
How Much Can You Borrow on a Buy to Let Mortgage?
The maximum you are allowed to borrow is typically connected to the amount of rental income that you will receive from the property. There will be a fluctuation in the amount you can borrow depending on the lender you decide to use. It is important to talk to local letting agents and various lenders to get an idea of what to expect.
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Where Can You Get a Buy to Let Mortgage?
Most large banks offer Buy To Let mortgages, as well as some specialist lenders. Talking with a Mortgage Broker can be a good idea because they can help you find the best deal for your situation and help guide you through the process.
Important Buy to Let Advice
It is important to plan for times when you won’t have any rent coming in from the property. There will be times when you are between tenants, but you will still need to be able to pay the mortgage payments. Savings for times like these, as well as major repairs, is essential.
You also need to save in order to pay off the mortgage at the end of the term. If property values fall, you will not be able to sell the property to pay off the mortgage, so don’t depend on that plan to pay off your mortgage.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
The Financial Conduct Authority does not regulate most Buy to Let Mortgages
We may charge a fee of up to £395 for mortgage advisory services and administration
Most Buy-to-Let Mortgages are not regulated by the Financial Conduct Authority
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