Buy to Let Mortgages
What is a Buy to Let mortgage?
A Buy to Let (BTL) mortgage is a loan that allows you to purchase a property to rent out to tenants. You cannot live in the property yourself, as it is intended to be an investment.
How does a BTL mortgage work?
With a BTL mortgage, you will only pay back the interest on the loan, not the amount you have borrowed. This is known as interest-only repayment. You will need to repay the full loan amount at the end of the mortgage term.
Who can get a BTL mortgage?
The eligibility criteria for a BTL mortgage are more relaxed than for a residential mortgage. You will typically need to:
- Have a stable income of at least £25,000 per year.
- Have a deposit of at least 25% of the purchase price.
- Be able to demonstrate that the rental income from the property will be enough to cover your mortgage payments.
- Be at least 18 years old and no more than 75 years old (some lenders have no upper age limit).
What are the different types of BTL mortgages?
There are two main types of BTL mortgages:
- Interest-only mortgages: These are the most common type of BTL mortgage. You will only pay back the interest on the loan, not the amount you have borrowed.
- Repayment mortgages: With a repayment mortgage, you will pay back both the interest and the amount you have borrowed over the term of the mortgage.
What are the benefits of a BTL mortgage?
There are a number of benefits to owning a Buy to Let property, including:
- Rental income: You can generate a regular income from renting out the property.
- Capital growth: The value of the property may increase over time, giving you a profit when you sell it.
- Additional Income: You can use the rental income to offset your mortgage payments, making your investment more affordable.
- Build a Portfolio of Properties: You can build up a property portfolio over time, which can provide you with a steady stream of income in retirement.
What are the risks of a BTL mortgage?
There are also some risks associated with owning a Buy to Let property, including:
- Tenants not paying rent: If your tenants do not pay rent, you will still be responsible for making your mortgage payments.
- Property damage: Your property may be damaged by tenants or by other factors, such as fire or flooding.
- Changes in the law: The law governing Buy to Let properties can change, which could affect your investment.
- Empty Properties: You could have difficulty finding tenants, or your tenants could move out unexpectedly.
- Property Value: The value of your property could fall, leaving you with negative equity.
- Taxes to pay: You will need to pay tax on the rental income you receive.
How can I get a BTL mortgage?
To get a BTL mortgage, you will need to speak to a mortgage broker. They will be able to help you find a lender that is right for you and to compare different mortgage deals.
A BTL mortgage is a loan that allows you to buy a property to rent out to tenants. This can be a great way to make money from your property, as you can charge rent that is higher than your mortgage payments.
If you are considering investing in a BTL property, it is important to do your research and understand the risks involved.
Here are some things to consider when applying for a BTL mortgage:
- Your income: You will need to have a stable income that is sufficient to cover your mortgage payments and other expenses.
- Your age: Some lenders have age restrictions for BTL mortgages.
- The type of property you want to buy: Some lenders have restrictions on the type of property they will lend on for BTL.
- Your deposit: You will need to have a deposit of at least 25% of the purchase price.
- Your credit score: A good credit score will make you more attractive to lenders.
- The Financial Conduct Authority does not regulate some forms of Buy to Lets.
- Your property may be repossessed if you do not keep up repayments on your mortgage.
If you are a first-time landlord, you may find it more difficult to get a BTL mortgage. However, there are lenders who specialize in lending to first-time landlords.
To find out more about BTL mortgages, or to get a quote, please contact Yes Mortgage Services Limited today.
We are a friendly and experienced team of mortgage advisors who can help you find the right BTL mortgage for your needs. We will work with you to understand your circumstances and goals, and we will match you with a lender who is best placed to offer you a competitive deal.