Mortgages are not a qualifying product; however, compare mortgage deals now and find the right deal for you.
A buy-to-let property can be a great investment. For some, buying a second house to rent out is a way of diversifying their income, while others may have inherited a property that they’d like to do up and rent out. Whether you’re a first time landlord or it’s your profession, you’ll be looking for the best buy-to-let mortgage deals (as well as the best buildings insurance offers). Here’s our guide on how to get started.
A buy-to-let mortgage is a secured loan that’s been specifically designed for people who want to invest in a property, whether a house or flat, then rent it out to tenants.
Not always. Most buy-to-let mortgages are interest-only loans and therefore the monthly repayments can be cheaper than a repayment mortgage. However, you’re likely to need a deposit of at least 15% before you’re able to borrow and overall fees tend to be higher. The amount you are able to borrow is also worked out slightly differently, being based on potential rental income as well as loan-to-value ratio (LTV).
In some cases, a residential mortgage will have a clause that stops you from renting out your property to make money, including AirBNB style rental. Lenders have different policies on this and its best to check first. Ignoring that, and going ahead anyway could land you in trouble.
Worst case your lender may decide you’re in breach of your mortgage terms and demand the mortgage is repaid immediately. Best to get the right mortgage for the job!
To be eligible for a buy-to-let mortgage, you’ll usually need to either own your own home outright or have an existing mortgage on it. It will also be much easier if you have a good credit history and you don’t have large levels of existing debt.
Lenders also usually set an upper age limit – normally you can’t be older than 70 or 75 when the mortgage term comes to an end.
When you have an interest only mortgage, you pay only the interest on the loan and nothing off the capital. This means that at the end of the term, you’ll still need to find the funds to pay off the outstanding capital balance.
With repayment mortgages, you pay off the interest and some of the overall cost of the property each month. At the end of your repayment term, you’ll have paid off both the price of the house – the capital – and the interest on it.
Whichever type you choose will depend on your personal circumstances and preferences.
There are a few things to consider to see if you can afford a buy-to-let mortgage:
Comparing buy to let mortgages can be time consuming, but that’s where we can help. Use our comparison service to find out what deals are available for you today, and fast track your way to becoming a landlord. Remember to check out landlord home insurance while you’re here.